Before I start I should say that I am using the phrase “lockdown” to describe the period starting with the announcement on 23 March 2020 and ending on 4 July 2020 with the relaxation of restrictions. I am no medical expert or UK Government official, so I can’t say if this will be the only lockdown, but I felt I needed to define a period to then give statistics for monies invested by the various measures instigated by the UK Government in response to the disruption caused by Covid-19 as a context for my comments that follow.
In this period (approx.):
|Coronavirus Loan Schemes – Total (to 5 July 2020)||45.4|
|Covid-19 Corporate Financing Facility||27.4|
|VAT and income tax self-assessment tax deferrals||50.0|
|Total tax deferrals and approved loan schemes||122.8|
|Employment support (including Coronavirus Job Retention Scheme and Self-Employed Income Support Scheme)||69.0|
|Business Support (includes Small Business Grant schemes, Coronavirus Statutory Sick Pay Rebate Scheme, business rates reliefs (and more)||30.3|
|Public service spending, funding for charities and vulnerable people||51.1|
|Total direct fiscal support||158.7|
Note: data largely taken from Policy Paper: A Plan for Jobs published 8 July 2020.
As most of you will be aware a number of the interventions have carried on post 4 July and new interventions have been added.
To give you some brief context to the scale of Government support and the figures above:
- I will repeat a statistic I know a colleague included in a previous blog, as part of the £45.4bn above, “Bank of England figures show that SMEs borrowed £18.2bn more than they repaid in May, exceeding the previous record of £589m seen in September 2016”. And presumably the £18.2bn excludes the tax deferrals.
- At the time of March 2020 budget Public sector spending for 2020/21 was expected to be £928bn (including £178bn on Health Care and £116bn on Education) per link
I know John Endacott has already commented in his excellent series of blogs in April (on the theme of “The outlook for the UK economy and taxation after coronavirus “) on some of the macro challenges, and opportunities, facing UK Government and UK businesses as a result of Covid-19.
What we going to look at briefly in parts 2 and 3 of this short series of blogs are the implications for business finance, with a focus on SMEs. I will limit the types of funding I am going to consider to debt and equity (in part 2); leaving my colleague Dave Armstrong to pick up grants (in part 3).