Mr Sunak is expected to unveil his intention this week to extend his four loan programs, which have already backed £ 53bn in business loans through government guarantees, a sign that further national support measures are needed to avoid Widespread business collapses and massive job losses.
The move to strengthen businesses comes as the government considers whether to do more to counter the spread of Covid-19, including further national restrictions in England. Sadiq Khan, mayor of London, spoke to ministers on Sunday about possible new restrictions in the capital.
A spokesperson for Mr Khan said the situation “is clearly getting worse” and hinted at imminent action: “The mayor wants swift action because we cannot risk delay.”
Mr Khan plans to urge workers to stay at home, undoing recent government efforts to get people back to their offices.
The drumbeat for tighter restrictions will intensify on Monday when Chris Whitty, England’s chief medical officer, and Patrick Vallance, chief scientific adviser, give a public briefing on the latest data from Covid-19.
“The trend in the UK is going in the wrong direction,” Professor Whitty will say. “We are at a critical moment in the pandemic. We are looking at the data to see how to handle the spread of the virus ahead of a very difficult winter period. ”
Hospitalizations in England are doubling every eight days and the R-number – or reproduction rate – of the virus was between 1.1 and 1.4 on Friday. Scientists fear Britain will follow France and Spain, where the virus has spread rapidly in recent weeks.
Boris Johnson, the Prime Minister, has said he wants to avoid a nationwide lockdown and has agreed with Mr Sunak that – for now at least – the restrictions should focus on reducing social interactions rather than closures of companies.
But Health Secretary Matt Hancock said “we are looking at all options” and Professor Whitty is pushing for tough new national restrictions – a perhaps two week “breaker” strategy – for delay the spread of the virus.
Mr Sunak has vowed to be ‘creative’ in finding ways to support jobs throughout the fall and is under pressure from Labor and some Tory MPs to extend the leave program – or set up a replacement – when it ends on October 31st.
Under plans made by the Treasury, business loan programs will all be extended for applications until the end of November, with banks being allowed to process loans until the end of the year. The Treasury declined to comment.
Three of the programs were due to end this month for applications. The fourth – the “rebound” loan program – was to be closed in early November.
According to two people familiar with the talks, the expansion is expected to include the Future Fund – the innovative support program that could see the government take stakes in dozens of fast-growing start-ups forced to take out state-guaranteed convertible loans. .
The Treasury has already resisted calls from business leaders for an extension of the program, a person familiar with the discussions said, with officials keen to cut expensive support programs as soon as possible.
The move aims to help businesses hit again by new lockdowns, either regionally or nationally, or forced to close again due to new curfews.
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Restaurants and bars have already seen more than half of their business wiped out this weekend in areas in the north that have been forced to put new restrictions in place, according to UKHospitality, which represents the sector.
The majority of state-guaranteed loans have been made under the ‘rebound’ program – offering loans of up to £ 50,000 interest-free – which has been used by over 1.1 million businesses so far. ‘now borrowing over £ 35bn.
More than 60,000 businesses have borrowed £ 13.7bn using the Coronavirus Business Interruption Loan Program (CBILS), which supports loans of up to £ 5m. The Big Business Disruption for Coronavirus (CLBILS) program – which partially guarantees loans of up to £ 200m – has helped lend £ 3.5bn.
The expansion will rekindle concerns about the scale of losses the government could face, with Office of Fiscal Responsibility estimates that up to 40 percent of ‘rebounding’ borrowers could default as businesses struggle. to repay their debts.