STRONG ACTION PLANNED TO SUPPORT SMALL AND MEDIUM SIZED ENTERPRISES (SMES) DURING THE COVID-19 PANDEMIC

Efforts to increase financial support for SMEs during the outbreak of Covid-19 are being escalated by both the public authorities and industry. Yesterday the chancellor of the exchequer, Rishi Sunak, and governor of the Bank of England (BoE), Mark Carney, held a summit with banking representatives to discuss further coordinated action to support SMEs, with banks pledging to make £20 billion available in funding to businesses (Daily Mail, p84: City A.M., online). The summit is evidence of further coordination between monetary and fiscal policy following events on Wednesday, when the BoE announced an emergency rate cut before Sunak's Budget (The Guardian, online only).

Following the meeting, Chief Executive of UK Finance, Stephen Jones, said:

?SMEs are the foundations of any successful economy and the banking and finance industry has the commitment and capacity to support viable businesses as they manage the impact of Covid-19. Alongside over £20 billion of funding, banks and finance providers are delivering targeted assistance to firms including repayment holidays, invoice finance extensions and fee-free emergency loans. This is in addition to the government's welcome announcement of the Coronavirus Business Interruption Loan Scheme, which the industry will work with the government to deliver as quickly as possible.

?We urge all businesses to think about how their customers and suppliers could be affected by this global outbreak and to contact their finance providers as early as possible if they think they might have any additional financing requirements.? 

Following a COBRA meeting, prime minister Boris Johnson has moved the government's position from ?contain? to ?delay?. A ban on major public events is under consideration, but schools will remain open for now. Those with even mild symptoms were also encouraged to stay at home for seven days (The Guardian, online only). Meanwhile, the French government has escalated its containment measures, closing schools and universities from Monday and encouraging teleworking (Reuters). However, President Macron stipulated that local elections will go ahead between 15-22 March. German chancellor Angela Merkel has highlighted that the government plans to present a ?very comprehensive? package of measures today (Reuters).

NEWS IN BRIEF

In a joint statement released by 10 Downing Street, UK and EU negotiators have decided to cancel Brexit negotiations due to take place in London next week (Independent, online).

The chief of the Financial Conduct Authority (FCA), Andrew Bailey, has refused to increase the IT levy on banks to fund greater operational resilience powers for the authorities (Financial Times, £, online).

The FTSE 100 began to recover as markets opened this morning after central banks around the world implemented new liquidity measures (City A.M., online).

The Electoral Commission has recommended that local elections in the UK, due to take place in May, should be postponed to the autumn (BBC News, online only).

The FCA has suspended the short selling of more than 150 Italian and Spanish stocks after Italian and Spanish regulators issued a similar ban late on Thursday (Telegraph, £, online).

WHAT THE COMMENTATORS SAY

Writing in the Financial Times (£), Kate Burgess emphasises that the City is resilient to the threat that coronavirus poses to international finance and business. 9/11 forced banks to develop contingencies for extreme scenarios (including ?disaster recovery? sites), modern technology has automated most trades and transactions can be completed remotely with ease. Ms Burgess contends that the main issue of widespread remote working relates to compliance. In the long run, however, the City will adapt to the challenge of the pandemic.

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