Businesses welcome Chancellor intervention but warn money must not be held up
Businesses welcomed the Chancellor’s range of packages announced to help prop up the economy during the coronavirus pandemic.
Several said the £330 billion in access to loans, a business rates holiday and other measures would help companies from going bust.
But some suggested more will need to be done by the Bank of England, including quantitative easing and interest rate cuts.
Economists also said measures to support workers – especially renters, who will not benefit from the mortgage payment holiday – are required, although more announcements are due later in the week.
The leisure and retail industries have been particularly vocal in calling for financial support, after ministers recommended limiting social contact and avoiding pubs and restaurants.
Helen Dickinson, chief executive of the British Retail Consortium, said: “The Chancellor… is to be congratulated for listening carefully to the concerns of retailers and has delivered a big, bold package of measures that will be a huge cashflow boost and will improve confidence for those affected.
“Business rates are a huge burden for retailers at the best of times. The business rates holiday, together with the announcement of a loan package, represent a vital shot in the arm for a sector facing enormous uncertainty.”
All businesses will not have to pay rates this year, equating to a saving of around £32 billion for companies concerned about going bust or laying off staff.
The pledge to offer £330 billion of commercial loan guarantees was also welcoming, with the range of packages going beyond most other countries in terms of per-capita spending commitments.
Some larger firms said the moves did not go far enough to help them, although small businesses were pleased with the support.
This includes a £25,000 grant for businesses entitled to the Retail Discount, with £10,000 for those qualifying for small business rates relief.
Federation of Small Businesses (FSB) national chairman Mike Cherry said: “This unprecedented package of loan guarantees, business rates breaks and cash grants marks a hugely welcome step forward.
“The key now is to deliver these measures within the coming days with no hold-ups at banks, local authorities or central government.
“Clearly small employers will need a huge amount of support to keep staff on their books at this hugely difficult time, so it was good to hear the Chancellor pledging to develop an Employment Support Package to help make that possible.
“We will be working together with the Government to ensure the employment package provides for the self-employed.”
But economists noted caution that more action is required.
Alan Monks, an economist at JP Morgan, said the “initiatives aim to help businesses meet their fixed costs and reduce the need to shed jobs”.
He added: “Although the package is set to grow in the coming days as further measures are added, it is still likely to look small compared to the economic shock under way.”
James Smith, an economist at ING Economics, explained that companies may also be wary of taking on more debt.
He added: “There’s little doubt this is a sizable package, and the Chancellor will be hoping the large sums contained within his announcement will help convince firms to hold off on any restructuring decisions they may be considering.
“However the real challenge for the Government will be to channel this money to firms rapidly, particularly in light of the number of businesses already making announcements about job losses.”