Less than a week on from the Budget, where an initial economic response was laid out, the Chancellor of the Exchequer, Rishi Sunak, announced a new financial package aimed at addressing the impact of COVID-19 on the UK’s economy. This took the form of £330 billion in loan guarantees for businesses to help them weather the economic fallout of the COVID-19 pandemic. The package also included £20 billion in other aid: a holiday on business rates, grants for pubs and retail operators, as well as the introduction of a mortgage holiday.
Specifically, the current holiday on business rates was extended to all firms in the hospitality, retail, and leisure sectors (e.g. shops, pubs, theatres, music venues, restaurants), easing their tax burden. Moreover, grants of between £10,000-£25,000 have been made available to small businesses to help them weather the shortfall.
For those small and medium-sized enterprises (SMEs) most at risk of collapse, business interruption loan limits will be increased from £1.2 million to £5 million, with no interest due for six months. Larger firms will also be able to access low-cost financing through a new lending facility.
This significant intervention amounts to more than 15% of UK GDP and follows similar economic interventions in France and Spain, where lockdowns have severely impacted economic activity.
The question now is how fast these measures can get up and running. The Chancellor stated that the loan scheme will be in place by next week and promised to “go further and provide as much capacity as required.”
techUK welcomes these measures which will help SMEs through this period of huge economic uncertainty. For the thousands of small tech businesses up and down the country this could no doubt prove to be a lifeline.
However, much of this support will not be relevant to startups in our ecosystem who will face cashflow issues and a lack of institutional know-how to best prepare them for the next few months. Just yesterday, we celebrated the success of our sector which demonstrated how UK tech was scaling, attracting ever greater amounts of VC funding and employing more and more people. It is vital that Government support startups too so we don’t go backwards during this time.
The overarching message from Government yesterday is – we will do what it takes. At techUK we have been working closely with Government to ensure that the tech sector can play its role in responding to the crisis. We are also committed to ensuring that sector’s voice is heard so tech’s bright light is not snuffed out.