UK pledges $398B in loans to help businesses

LONDON

The U.K.'s chancellor of the exchequer on Tuesday announced £330 billion ($398 billion) in loans to businesses as part of an “unprecedented” financial support package to the British economy, following the coronavirus outbreak.

Rishi Sunak said he was willing to do “whatever it takes” to keep companies and employees afloat, and was willing to provide more assistance if needed.

He was speaking at a news conference alongside Prime Minister Boris Johnson and Chief Scientific Adviser Sir Patrick Vallance.

The chancellor also announced cash grants of up to £25,000 ($30,300) to companies to help them through this difficult period, and business rates -- taxes on commercial properties -- would be waived this year for companies in retail, hospitality, and leisure sectors – all of which have been among the hardest hit by the virus forcing people to stay at home.

He said the total package given to businesses was worth £20 billion ($24 billion).

Sunak’s economic measures came after a day of stark economic warnings.

Richard Chote, the head of the government’s economic watchdog, the Office for Budget Responsibility, said Britain was in a “wartime situation” and the economy was “probably shrinking as we speak.”

He made his comments to MPs on the Treasury Committee while discussing last week’s budget, and said the £12 billion ($14.5 billion ) pledged by the chancellor at the time was only a start. “One regards the £12bn as being a down payment. The idea of what needs to be done and how expensive it needs to be is going to change on a daily basis.”

Capital Economics, an economic research consultancy, predicted that the U.K. economy could shrink by approximately 15% over the next quarter due to a coronavirus-induced recession.

In a statement, NHS England confirmed that a further 14 people had died in England, the most populous of the U.K.’s four nations. “A further 14 people, who tested positive for the coronavirus (COVID-19) have died, bringing the total number of confirmed reported deaths in England to 67. Patients were aged between 93 and 45 years old and had underlying health conditions.”

Local media also reported that Brexit talks scheduled to take place between the U.K. and the EU this week were canceled.

The U.K. government has ruled out an extension, with a government spokesman saying both sides were considering “alternative ways to continue discussions, including looking at the possibility of video conferencing or conference calls, and exploring flexibility in the structure for the coming weeks. The transition period ends on 31 December 2020. This is enshrined in UK law.”

The U.K. Foreign Office also released a statement saying it “has advised against all non-essential international travel, initially for a period of 30 days. This advice takes effect immediately.”

Airports also appealed for government assistance, saying they could be forced to shut down within weeks.

Karen Dee, chief executive of the Airport Operators Association, said: “Governments across the world are supporting their national aviation industries, as many parts of the global travel industry have come to a halt. As some airlines call on the UK government to act similarly, we are clear that airports will shut down in weeks unless urgent action is taken to support the industry.”

COVID-19 emerged in Wuhan, China last December, and has spread to at least 159 countries and territories. The World Health Organization has declared the outbreak a pandemic.

Out of over 190,000 confirmed cases, the death toll now exceeds 7,500, while over 80,500 patients have recovered, according to Worldometer, a website that compiles new case numbers.

The current number of active cases is more than 102,000 -- 94% mild and 6% in critical condition, according to the website.