UK unveils $420 billion lifeline for firms hit by coronavirus

By Costas Pitas and Andy Bruce LONDON (Reuters) - Britain said it would launch a 330 billion-pound ($399 billion) lifeline of loan guarantees and provide a further 20 billion pounds in tax cuts, grants and other help for businesses facing the risk of collapse from the spread of coronavirus. Finance minister Rishi Sunak repeated his pledge to do 'whatever it takes' including further action if needed to help sectors from retailers to bars and airports which are reeling from a near-shutdown of their businesses

Reuters March 18, 2020 03:07:19 IST
UK unveils $420 billion lifeline for firms hit by coronavirus

UK unveils 420 billion lifeline for firms hit by coronavirus

By Costas Pitas and Andy Bruce

LONDON (Reuters) - Britain said it would launch a 330 billion-pound ($399 billion) lifeline of loan guarantees and provide a further 20 billion pounds in tax cuts, grants and other help for businesses facing the risk of collapse from the spread of coronavirus.

Finance minister Rishi Sunak repeated his pledge to do "whatever it takes" including further action if needed to help sectors from retailers to bars and airports which are reeling from a near-shutdown of their businesses.

"This is not a time for ideology and orthodoxy," Sunak said on Tuesday, speaking alongside Prime Minister Boris Johnson. "This is a time to be bold, a time for courage."

Britain, criticised by some scientists for moving more slowly than other European countries to prevent the spread of the virus, ramped up its response on Monday when it told people to avoid pubs, clubs, restaurants, cinemas and theatres.

The coronavirus death toll in Britain rose by 16 to 71 on Tuesday.

Sunak said he was including all retail, hospitality and leisure businesses in the suspension of a property tax, alongside the new loan guarantee programme which was equivalent to 15% of British economic output.

Companies from those sectors would be offered cash grants and the government would discuss a support package for airlines and airports.

Britain's biggest airports including Heathrow and Gatwick have warned that they face the threat of a complete shutdown without government help.

Banks and lenders would offer a three-month mortgage holiday for people in difficulty, Sunak said.

He later told lawmakers, some of whom criticised the business focus of the plan, that the government would soon make a statement about support for renters.

Sunak described Tuesday's package of measures as unprecedented, although Britain issued guarantees of around 1 trillion pounds during the global financial crisis.

The Institute for Fiscal Studies, a think-tank, said Sunak would need to "come back with more" and Allan Monks, a JP Morgan economist, said that excluding the loan guarantees, the size of Britain's stimulus measures for this year was "likely to look small compared to the economic shock underway."

NO TIME TO BE "SQUEAMISH" ABOUT DEBT

The Bank of England said it would set up a new fund with the finance ministry to buy commercial debt with a term of up to one-year issued by investment-grade companies making a "material contribution" to Britain's economy.

It added that the fund would be financed out of the creation of central bank reserves -- in other words with new money, much like the BoE's quantitative easing programme.

Earlier on Tuesday, Britain's budget forecasters said the scale of the borrowing needed to fight the coronavirus hit to the economy might resemble the country's immense debt splurge during World War Two.

"Now is not a time to be squeamish about public sector debt," Robert Chote, head of the Office for Budget Responsibility, told lawmakers.

"We ran during the Second World War budget deficits in excess of 20% of GDP five years on the trot and that was the right thing to do."

On Monday, French President Emmanuel Macron said his government would guarantee 300 billion euros worth of loans, and promised that no French company would be allowed to collapse.

New Bank of England Governor Andrew Bailey promised "prompt action" on Monday, less than a week after an emergency rate cut by the BoE which took its benchmark rate to just 0.25%.

Investors are watching for another rate cut, possibly before the BoE's next scheduled announcement on March 26.

The central bank is also expected to expand its 435 billion-pound government bond buying programme.

(1 = 0.8297 pounds)

(Additional reporting by David Milliken and Elizabeth Howcroft; Writing by William Schomberg; editing by Guy Faulconbridge, William Maclean)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.