Last night the Chancellor announced a number of proposals as an economic response to the coronavirus crisis. This was clearly necessary as a result of the advice the Government has given the country in recent days to avoid pubs, cafes, restaurants and other social gatherings, as well as the cancellation of all major sporting events.
The key proposals were a £330bn loan guarantee scheme, a business rate holiday, grants for some small businesses and a three month mortgage holiday for those who need it. The biggest share of the proposals is the loan guarantee scheme. These proposals are certainly of help and will bring relief to some businesses but not every business will want to borrow in a situation where their cashflow has dried up as a result of advice to the country to avoid social contact.
The Chancellor has acknowledged that the big piece missing from his proposals is direct financial help for workers affected. This has been put in place in a number of countries where, at least for a temporary period, Governments are guaranteeing a proportion of people’s income so they can pay their bills. I sit on Parliament’s Select Committee on Business and witnesses from business and unions alike said yesterday that a scheme like this was needed urgently in the UK. Otherwise, hundreds of thousands of workers in sectors like pubs, restaurants and leisure could lose their income, plunging them into severe difficulty and the country into a steep recession. It is this point I pressed the Chancellor on when he announced his package to Parliament last night.