The retail industry has welcomed the Chancellor’s quick move to support businesses with a range of packages announced yesterday to help prop up the economy during the COVID-19 coronavirus pandemic.
It’s believed that the £330bn in access to loans, a business rates holiday for all retailers and other measures announced will help companies from going bust in the short term, though concerns have still been aired by businesses regarding going into unmanageable debt.
Responding to the Government’s announcement, Helen Dickinson, CEO of the British Retail Consortium (BRC), said: “The Chancellor has acted swiftly to back retail businesses dealing with the unprecedented challenges created by coronavirus. He is to be congratulated for listening carefully to the concerns of retailers and has delivered a big, bold package of measures that will be a huge cashflow boost and will improve confidence for those affected.
“Business rates are a huge burden for retailers at the best of times. The business rates holiday, together with the announcement of a loan package, represent a vital shot in the arm for a sector facing enormous uncertainty. We still need to see the details and make sure that retailers can access cash with the minimum of delay, but it is a welcome and necessary first step to protect jobs.”
No retailers will have to pay rates this year and the pledge to offer £330bn of commercial loan guarantees was also welcomed, with commentators noting that the range of packages goes beyond most other countries in terms of per-capita spending commitments.
Nonetheless some larger firms said the moves did not go far enough to help them, although small businesses were pleased with the support. This includes a £25,000 grant for businesses in properties with a rateable value of less than £51,000, who were last week granted a year-long rates holiday, with £10,000 for all of those businesses qualifying for small business rates relief.
Federation of Small Businesses (FSB) national chairman, Mike Cherry, said: “This unprecedented package of loan guarantees, business rates breaks and cash grants marks a hugely welcome step forward.
“The key now is to deliver these measures within the coming days with no hold-ups at banks, local authorities or central government.
“Clearly small employers will need a huge amount of support to keep staff on their books at this hugely difficult time, so it was good to hear the Chancellor pledging to develop an Employment Support Package to help make that possible.”
Despite the welcoming news, economists did caution that more action is required. James Smith, an economist at ING Economics, said that companies may also be wary of taking on more debt in the form of Government loans.
He commented: “There’s little doubt this is a sizable package, and the Chancellor will be hoping the large sums contained within his announcement will help convince firms to hold off on any restructuring decisions they may be considering.
“However, the real challenge for the Government will be to channel this money to firms rapidly, particularly in light of the number of businesses already making announcements about job losses.”
Alan Monks, an economist at JP Morgan, added: “The initiatives aim to help businesses meet their fixed costs and reduce the need to shed jobs. Although the package is set to grow in the coming days as further measures are added, it is still likely to look small compared to the economic shock under way.”
In an interview with the Today programme Carolyn Fairbairn, the CBI director general, said the Chancellor had announced a “serious and massive package of measures”, but she said firms needed help now to allow them to keep people in work.
Fairbairn said the CBI wanted the government to use the national insurance system to pump money into companies. Instead of paying national insurance, they would get a cheque for “reverse national insurance” from the government adding that a Fairbairn a similar system was operating in Germany. She also suggested that VAT bills should be deferred.