U.K. Government Sets Out $399 Billion in Loans to Battle Coronavirus Business Impact

Tim Dams
·4 min read

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The U.K. government has set out a series of major interventions to bolster the economy and business in the wake of the coronavirus pandemic, including support for theaters and cinemas — but questions still remain on the fate of the freelance workforce.

“We must act like any war-time government and do anything it takes to support our economy,” said Prime Minister Boris Johnson at a Downing Street press conference Tuesday, the second of a series of daily press briefings to discuss the government’s response to coronavirus outbreak.

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Chancellor Rishi Sunak said that coronavirus is “a public health emergency but also an economic emergency”, and promised government intervention “on a scale unimaginable only a few weeks ago”.

He announced government-backed loans worth £330 billion ($399 billion) — or 15% of U.K. GDP — “to get businesses through this.”

The Chancellor also addressed creative industry concerns about the impact of government advice to avoid venues such as theaters, cinemas and clubs. Many had worried that because the government stopped short of announcing an outright ban, venues would not be able to claim on insurance.

“For those venues which do have a policy that covers pandemics, the government action is sufficient to allow them to make claims,” said Sunak.

For the smaller businesses in the hospitality sector who don’t have insurance, Sunak said he will provide cash grants of £25,000 ($30,000) per business “to help bridge through this period.”

He added that businesses in the sector will get a business rates holiday for 12 months.

For individuals, the Chancellor announced that mortgage lenders will provide three-month mortgage holidays for those that need them.

“In the coming days I will go much further to support people’s financial security,” he added, promising to talk to trade unions and business groups to arrange new support.

Question mark over freelance support

Philippa Childs, head of entertainment union Bectu, said the measures announced on mortgage payments and on alleviating hardship are welcome, “but there was no specific mention of freelancers and it is hugely unclear how any of the measures he did announce will benefit them.”

“Bectu research shows that 97% of freelancers are dissatisfied with the government’s response to the crisis. Nothing that has been announced so far will change that. We need urgent and specific action from the government in the coming days or it may already be too late for many freelancers to avoid financial ruin.”

U.K. producers’ trade body Pact on Tuesday called on the government to adopt a range of measures, including support of SMEs, which suspend all payments of HMRC liabilities for VAT, PAYE, NI and corporation tax, as well as a business rates holiday “for as long as necessary.”

On behalf of the freelance and self-employed workforce, the trade body has also demanded simplified access and processes for state unemployment benefits and a freeze on all personal credit interest payments and an increase in borrowing limits to ensure support for program budgets when the current hiatus on production comes to an end.

How government support compares internationally

In comparison to other countries, the U.K.’s loans package skews towards the higher end of the spectrum for support.

In Germany, €550bn ($603 billion) has been promised in government-backed loans, while in the U.S., President Donald Trump is looking to pass a $850 billion package through Congress.

Meanwhile, France has created a €45 billion ($50 billion) package to support businesses and workers, in addition to the €500 billion ($547 billion) promised on Monday.

Elsewhere, Italy has promised cash flows of €340 billion ($383 billion), while Spain has said it will spend €200 billion ($220 billion) — its largest spending package in 40 years.

Manori Ravindran contributed to this report.

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