Coronavirus: UK government plans to save key companies

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Man in mask crosses Westminster Bridge in front of the Houses of Parliament

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The British government has said it is ready to rescue large British companies severely affected by the coronavirus crisis.

The bailout, known as the “Birch Project,” was raised by Transport Minister Grant Shapps in Parliament last week during discussions on the future of the aviation industry.

The state could also acquire stakes in companies, reports the Financial Times.

HM Treasury has said that bailouts will only be considered as a “last resort”.

In a statement, a spokesperson for the Treasury said, “We have put in place unprecedented levels of support to help businesses weather this crisis.” In addition, many companies benefit from the support of established market mechanisms, such as existing shareholders, bank loans and trade finance.

“In exceptional circumstances, when a viable business has exhausted all options and its failure would disproportionately harm the economy, we can consider support as a” last resort “.

“As the British public might expect, we are putting in place sound emergency planning and any such support would be on terms that protect the taxpayer. “

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The BBC understands that the Treasury should inform Parliament of any expenditure incurred and that, although businesses may request financial assistance, this does not mean that such support will be granted.

Companies in difficulty

Sky News reported on Saturday that Tata Steel, Britain’s largest steel producer, had approached the Welsh and British governments for financial aid of up to hundreds of millions.

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AFP

Legend

Tata Steel says there has been a sudden drop in European demand for steel and urgently requests government help


Earlier this week, Welsh MP Stephen Kinnock told Parliament that Tata Steel, owner of the Port Talbot steelworks, would need around £ 500 million to survive the pandemic.

And according to the Financial Times, heads of the aviation industry have asked the government for a “long-term investment facility” that would help support supply chains.

Jim O’Neill, former Minister of the Treasury and former chief economist of Goldman Sachs, told the newspaper that he had discussed with government officials the creation of a public sector funding agency to acquire stakes in companies that would be “inherently stable” in times of normal economic activity.

To date, to mitigate the financial impacts of the coronavirus shutdown, the government has announced a range of measures – deferring tax payments such as VAT and corporate rates, and paying more than eight million workers’ wages. workers through the leave scheme, which was extended until July 31.

It also disbursed £ 22 billion in government loans, as well as £ 20.4 billion in corporate finance through the Bank of England.

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