Government to provide guarantees behind loans to firms while mortgage lenders will offer payment holiday
Rishi Sunak has pledged to make £330bn of loans available to businesses to support them through the coronavirus pandemic.
In the second of the government’s daily press conferences, the chancellor said the government would offer guarantees to stand behind commercial loans to businesses to ensure that firms can get access to the funding they need.
Sunak said the government will make more funding available should demand for the loans outpace supply.
He also said the government will offer additional cash support for businesses in vulnerable industries, and had secured an agreement from mortgage lenders to waive payments for a three-month period for individuals in difficulty.
He said: “This national effort will be underpinned by government interventions in the economy on a scale unimaginable only a few weeks ago. This is not a time for ideology or orthodoxy.
“We will support jobs, support incomes, support business, and help you protect incomes.
“We will do whatever it takes.”
The move follows similar measures by European leaders to combat the pandemic, including €300 billion pledged by French president Emmanuel Macron yesterday.
But Civil Engineering Contractors’ Association chief executive Alasdair Reisner said there were “questions over the long-term consequences”.
He said in a tweet: “This looks like [the] UK’s equivalent of Macron’s ‘won’t let any business fail’. Loans hopefully help firms avoid short-term failure. [But] questions re long term consequences. Also help for immediately affected sectors makes case for construction to get act together to identify key asks for government.”
Meanwhile, Noble Francis, economics director at the Construction Products Association, said the measures risked being a “sticking plaster.”
He tweeted: “If firms get loans (to be paid back) backed by government but they face sharp falls in revenue then it is a sticking plaster and they still need to cut costs, the key one being labour and there’s no provision to stop them shedding people. A key failing and needs addressing.”
And Phil Campbell, head of policy and public affairs at the Federation of Master Builders, tweeted: “Hopefully we’ll see more on some of the things industry is calling for in the next couple of days. We just need to continue to keep making noise so construction isn’t left behind.”