Britain unveils €5bn in extra business support amid third lockdown 

Britain's Chancellor of the Exchequer Rishi Sunak has previously announced emergency help for the economy worth £280bn, including a massive job protection scheme that will run until the end of April.

Britain has offered a £4.6bn (€5.1bn) support package for businesses to soften an expected recession caused by a surge in Covid-19 cases that has triggered a third national lockdown.

British Prime Minister Boris Johnson announced the lockdown this week, saying a highly contagious coronavirus variant risked overwhelming the health service within 21 days.

Most people in the UK must work from home and schools have closed for almost all pupils. Hospitality venues must stay shut, as well as non-essential shops.

Britain’s economy looks likely to tip back into recession - shrinking in the final quarter of 2020 and the first quarter of 2021 - following a record 25% fall in output in the first two months of lockdown in 2020.

The new downturn is expected to be far softer, with most businesses now much better adapted to working remotely and construction sites and factories expected to stay open.

But economists at J.P. Morgan still predicted a 2.5% fall in output for the first three months of 2021.

Britain's Chancellor of the Exchequer Rishi Sunak has previously announced emergency help for the economy worth £280bn, including a massive job protection scheme that will run until the end of April.

Under Tuesday’s additional measures, retail, hospitality and leisure companies will be able to claim one-off grants worth up to £9,000 (€10,000) to get them through the coming months, costing up to £4bn in total, along with £600m of grants for other businesses.

“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen,” Mr Sunak said.

British Government forecasters in November predicted almost £400bn of borrowing this financial year, equivalent to 19% of GDP - a peacetime record but one that, at least for now, can be financed at record-low interest rates.

The Bank of England is buying government debt and in November ramped up its asset purchase programme to almost £900bn with the intention of using it throughout 2021.

However, the British Chambers of Commerce said Sunak’s “drip-feed approach” to support for businesses would see many go to the wall as they would not qualify for sufficient assistance.

🗣️ "What they'd like to see is clarity over a longer period of time, not repeated announcements that cover perhaps one or two months at a go."

📺 @BCCAdam calls on @GOVUK to set out a long-term plan for business support on @SkyIanKingLive 👇 pic.twitter.com/Fla5NbNy1M

— BCC (@britishchambers) January 5, 2021

“While this immediate cashflow support for business is welcome, it is not going to be enough to save many firms,” BCC director-general Adam Marshall said. The opposition Labour Party said millions of people had been let down by Sunak’s announcement.

“Instead of delivering the support that Britain needed, he’s ploughing on with plans to hit people in their pockets with pay cuts, benefits cuts and tax rises,” its finance spokeswoman Anneliese Dodds said. The OECD has estimated Britain’s economic recovery by the end of this year will be the slowest of all its member countries except Argentina. 

Reuters