COVID-19 LOAN SCHEMES REACHING FIRMS IN MOST FINANCIAL DIFFICULTY

More than 910,000 businesses have now been helped by the banking and finance industry through the government's coronavirus loan schemes.

Figures published by HM Treasury today reveal that lenders have provided £38.2 billion through the three major government-backed lending programmes. £3.3 billion has been approved to 83,000 businesses in the past week, with more applications expected to be approved in the coming days as the industry continues to help the UK get through these tough times.

These figures come as recent research for UK Finance by BVA BDRC revealed that almost 90 per cent of firms have had their applications for a Bounce Bank Loan (BBL) or Coronavirus Business Interruption Loan (CBILS) facility approved where a final decision has been made.

Stephen Jones, CEO of UK Finance, said:

?Businesses of all sizes are facing unprecedented challenges in the face of the pandemic, but the banking and finance industry has a clear plan to get them through.

?Lenders have provided over 910,000 businesses with £38 billion through the government-backed lending schemes to date, with tens of thousands of approvals every day, ensuring financial support reaches those firms who need it most.

?It's important to remember that any lending provided under government-backed schemes is a debt, not a grant, and so firms should carefully consider their ability to repay before applying.?

CARD SPENDING UPDATE FOR MARCH 2020

There were 1.6 billion transactions on debit cards made by UK cardholders both in the UK and overseas in March 2020, 4.9 per cent more than in March 2019, according to UK Finance's Card Spending Update for March. This reflected a total spend of £52.1 billion, 2.2 per cent more than in the same period in 2019. Meanwhile there were 272 million transactions on credit cards in March, 1.1 per cent fewer than in March 2019. Total credit card spending was £14.5 billion in March, 12.3 per cent less than in the same period a year earlier. This coincides with the implementation of lockdown.

The annual growth rate of outstanding balances on credit cards contracted by 2.2 per cent in March 2020, the first time it has shrunk since October 2012. The impact of the introduction of payment deferrals on 9 April 2020 will be more apparent in future months.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said:

?The reduction in credit card transactions and the fall in outstanding balances coincides with the implementation of the Covid-19 lockdown from 23 March, with opportunities to spend much reduced. We expect that this pattern of reduced spending will be reflected throughout the lockdown period. Meanwhile, spending on debit cards in March continued on the upward trend seen in previous months.

?The banking and finance industry has a plan to help their customers at this difficult time. Anyone who is experiencing financial difficulty should contact their credit card company to discuss the help available to them, including repayment holidays to provide customers with short-term support. It's important to remember that interest will normally continue to be charged during a payment holiday and the amount owed will not reduce, so customers should carefully consider whether it is the best option for them before proceeding.

NEWS IN BRIEF

An end of July deadline for agreeing a trade deal between the UK and the EU has been set by Boris Johnson, with the prime minster saying that he didn't think the two sides are ?actually that far apart? (Financial Times, p1, £).

The number of people on payrolls in the UK fell by 612,000 in the three months to May, according to the Office for National Statistics, although the overall UK unemployment rate held steady at 3.9 per cent % in the three months to April (BBC News). 

The global economy will have a short but sharp recession, with economic output expected to return to previous levels by the end of the year, according to analysts at Morgan Stanley (The Times, p34, £).

Public trust in the European Central Bank (ECB) has fallen in the past decade, with the decline more marked than other institutions, according to an ECB paper published yesterday (Reuters).

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