With the coronavirus outbreak intensifying, many UK businesses are increasingly worried about the potential impact on their business operations – be this restrictions to travel, cancelled events, supply chain disruptions, and so on.
Bank of England interest rate cut
In order to counter the impact of the coronavirus on the UK economy, the Bank of England stepped up their efforts on 11 of March. It reduced interest rates from 0.75% to 0.25% and announced to offer banks relatively cheap funding for four years to support business and individuals through this challenging time. Many lenders have already started offering payment holidays and emergency loans for some of their customers.
UK Budget – support for small and medium-sized businesses
The UK Budget announcement, which also took place on 11 March, is closely linked to the current economic situation and the uncertainty around the coronavirus outbreak. Chancellor Rishi Sunak had come under great pressure to focus on supporting UK businesses and individuals with additional financial help. Temporarily abolishing business rates for firms with a rateable value below £51,000, as well as supporting smaller firms with employees’ sick pay and increasing the employment allowance, are all steps in the right direction and should take some weight off the shoulders of small and medium-sized businesses in the UK.
We especially welcome the funding announcements for UK businesses, including £130 million of new funding to extend start-up loans, as well as £5 billion of new export loans for businesses. Too many companies still struggle to access the right finance to reach their full potential. The additional funding will hopefully support more businesses, helping them to grow and hire more staff. This will ultimately benefit the UK economy as a whole and better prepare them for a thriving UK post-Brexit.
Coronavirus, a drop in the oil price, stock price volatility, a decrease in interest rate – the last days have been a rollercoaster ride for UK businesses and the British economy. Uncertainty will remain for the next weeks, and it is difficult to predict the development and subsequent consequences of the coronavirus on the market. That said, seeing the Bank of England, the Government as well as banks working together to support UK businesses is reassuring and sends the right signals to those firms currently struggling to cope.
Niels Turfboer is Spotcap’s Managing Director.
Originally published March 11 2020 , updated March 11 2020