Coronavirus: UK releases 'unprecedented' financial measures worth 15% of GDP

Lianna Brinded
Updated ·4 min read
Prime Minister Boris Johnson. Photo: Getty
Prime Minister Boris Johnson. Photo: Getty

The UK government has just unleashed an ‘unprecedented’ set of financial measures to help the UK economy tackle the impact from the coronavirus.

UK chancellor Rishi Sunak said that while the coronavirus “will not be overcome by a single [financial] package,” it will take a “collective national effort.”

He said that the UK government wants to “reassure that this government will give you all the tools you need to get through this.”

He added that the coronavirus pandemic wasn’t just a “health emergency” but also “an economic emergency.”

The package is worth 15% of UK GDP, up from a package announced last week worth 1% of GDP, and include:

  • £330bn government-back loans and guarantees: This will be available for all sizes of businesses to help them pay wages, suppliers, and keep afloat during turbulent times.

  • Business interruption loan scheme: For smaller businesses, of up to £5m each.

  • £25,000 cash grants: This will be available for smaller businesses who don't have insurance.

  • £10,000 cash grants: These will be available for the smallest of firms — for example, small family-run businesses.

  • Three-month mortgage holidays: All mortgage lenders will now provide three-month mortgage holidays for those that need them.

  • Business rate holiday: There will be an extension of this from the Budget announcement.

The NHS said today there was a rise of 14 deaths from the coronavirus in England, pushing the UK death toll to 71. The patients were aged between 45 and 93 years old and had underlying health conditions.

Some 1,950 people have tested positive for the virus in the UK, According to the latest department of health figures. Around 1,950 people have tested positive for the virus in the UK but the actual number of cases could realistically be as high as 55,000.

UK prime minister Boris Johnson said that "Yes, this enemy can be deadly, but it is also beatable. And we know how to beat it and we know if as a country we follow the scientific advice... we know that we will beat it".

"However tough the months ahead, we have the resources and the resolve to win the fight," he said.

The new financial stimulus measures come a day after UK prime minister Boris Johnson unveiled the new direction the nation is going in on tackling the coronavirus, which is set to have a major impact on businesses.

He made a switch from the ‘mitigation’ strategy to the ‘suppression’ strategy. The first involves home isolation of suspect cases and their family members but allows the rest of society to roam about freely and no restrictions are put on others.

READ MORE: Coronavirus risks pushing hotel, cafe, and bar businesses into extinction

However, the Imperial College Covid-19 Response Team, which advise the government, found that the strategy previously being pursued by Johnson and his cabinet would result in the deaths of hundreds of thousands of people. They recommended the UK government to switch to the ‘suppression’ strategy, which will lead to restrictions on wider society.

At a press conference on 16 March, Johnson urged everyone to avoid unnecessary social contacts and to work from home where possible — but stopped short at an outright ban like other countries such as Germany.

Last week, UK chancellor Rishi Sunak announced a £30bn coronavirus spending package, which included a £5bn emergency response package for the NHS, £2bn has been set aside to cover up to 14 days of sick pay for employees at businesses with fewer that 250 employees as well as £500m will be provided to local authorities to directly support vulnerable people.

READ MORE: Budget 2020: Here's everything that you need to know

Business-wise, the UK government pledged the abolition of business rates for retail, leisure, and hospitality firms that have a rateable value of less than £51,000 as well as a £3,000 cash grant for around 700,000 of the country’s smallest, eligible businesses.

These have now all been renewed.

The Bank of England also announced emergency measures the same day, in response to the economic impact of novel coronavirus, including an unexpected interest rate cut from 0.75% to 0.25%. This makes borrowing and servicing debt cheaper and stimulates the economy.

It also announced a £100bn funding scheme aimed at maintaining bank and building society lending to small and medium-sized businesses, amongst other measures.