The coronavirus outbreak which began in China, has now infected more than 200,000 people across the world. The rapid spread of the virus has left businesses counting costs, as the economic fallout stretches across the UK.
A £350bn stimulus package
On Tuesday, the chancellor Rishi Sunak announced support for struggling businesses in the form of a £350bn stimulus package. This includes £330bn of business loans, which are guaranteed by the government, in addition to further cash grants for small businesses. The government has also promised a business rates holiday and grants for businesses within the retail and hospitality industry. Despite relieving some of the financial pressure, there are concerns that these measures will not go far enough.
Chancellor prepares wage package rescue plan
MPs across all parties are warning that businesses of all sizes are facing significant financial issues, due to the anti-virus measures implemented across the country. Despite emergency loans, many firms are concerned they will be unable to retain their usual staff numbers. However, today the Chancellor Rishi Sunak announced that the government will be paying 80% of wages for employees which are unable to work due to the pandemic.
With many firms warning they are on the brink of collapse, this new information will be welcome news. The wage subsidy will be available up to a maximum of £2,500 per month for three months and will be backdated to the beginning of March. However, the scheme will not be up and running until the end of April.
It is hoped the wage package will prevent thousands of layoffs, while going some way to protecting the economy from the potentially devastating effects of Covid-19. The government stated that this subsidy will be available to firms which have already been forced to lay off workers, if these workers are reemployed and instead granted a temporary leave of absence.
Interest rates cut to an all-time low
Early trading in the FTSE 100 showed a rise of 5%, as investors responded to the Bank of England cutting interest rates to al all time low of 0.1%. The FTSE experienced its biggest one-day declines since 1987, as investors feared economic growth would be destroyed with governments not stepping in to take action.
Thankfully the Bank of England stepped in and the impact also helped the pound to rise 3.3%, from a record 35-year low against the US dollar. In the last week the Bank of England has cut interest rates twice, with many lenders also committing to reduce the cost of borrowing. For example, many mortgage lenders have offered 3-month mortgage holidays to those which have been impacted by the virus.
The Bank has also announced the purchase of an additional £200bn UK government and corporate bonds, which will be used as part of its quantitative easing stimulus package. This aim is to inject cash into the economy while keeping the costs of borrowing low.
Competitive loans and finance options for businesses across the UK
As businesses across the country see their cashflow fall, we can help you find the finance you need, to help you through the temporary economic difficulties. With interest rates at a record low borrowing is cheaper than ever, and we can help you compare everything from business loans to overdrafts and credit cards.
If you are looking to ease the burden of staff wages until the wage subsidy is paid, we can help your find the most competitive finance option. As businesses struggle to access the loans and grants promised by the government due to a lack of clarity, our panel of traditional and alternative lenders are here to help.
We understand the need for quick decisions and fast payments, so that businesses and jobs are protected during this crisis. To find out more about applying for a business loan or another form of finance, please contact our team today.