News in brief - 27 May 2020

LENDERS PROVIDE £27.5 BILLION TO 652,200 BUSINESSES THROUGH COVID-19 LENDING SCHEMES

Figures published by HM Treasury today reveal that lenders have approved £27.5 billion to more than 650,000 businesses so far through the three major government-backed lending schemes: the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

In the past week alone, more than £5.4 billion in lending has been provided to over 146,000 firms through government-backed lending schemes. This decisive action by lenders to support businesses affected by the coronavirus crisis is part of the industry's plan to get Britain through these challenging times. The Bounce Back Loan scheme - aimed at sole traders and micro businesses - has seen £18.45 billion provided by lenders. £4.3 billion has been approved in the last week, an average of £615 million each day.

These government-backed schemes are just one part of the banking and finance sector's plan to help businesses get through these tough times, with the industry also providing working capital facilities, overdraft extensions, capital repayment holidays and asset-based finance.

Stephen Jones, Chief Executive of UK Finance, said:

?The banking and finance industry has a clear plan to help businesses get through these tough times.

?Lenders are providing an unprecedented level of support to firms affected by the Covid-19 crisis, with £27.5 billion being approved to over 650,000 businesses through government-backed lending schemes so far, and a further £20.5 billion drawn under bank arranged commercial paper facilities.

?Businesses can also access a wide package of support measures as part of the industry's plan, including extended overdrafts, capital repayment holidays and asset-based finance.

?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.?

BANK OF ENGLAND SAYS ECONOMIC SLOWDOWN SET TO BE LESS BAD THAN FEARED

Andy Haldane, the Bank of England's (BoE) chief economist, has said the latest economic data shows there has been a modest recovery in spending and business confidence, meaning the slowdown from the coronavirus pandemic may not be as bad as some feared (The Guardian, p33). Mr Haldane said recent data was coming in just "a shade better" than a scenario for the economy published by the central bank earlier this month, but risks remained that the recovery could be slower as companies and consumers remained cautious (The Telegraph, p1).

In a seminar conducted by the Confederation of British Industry (CBI), Andy Haldane said: ?Nobody is predicting that the bounceback will be as sharp as the fall. Even after lockdown is lifted there will be a period of prolonged caution in spending by households and businesses.? He said that the economy could still enjoy a ?V-shaped recovery?, characterised by a swift rebound in growth after a sharp decline (The Times, p40, £).

Separately, City AM reports that Mr Haldane said the BoE is ?not remotely close? to making any decision on taking interest rates below zero to cope with the pandemic. He said the key factors for the BoE to consider were the consequences of negative rates for banks and lenders, which would squeeze margins.

NEWS IN BRIEF

Action Fraud says it received 26 fraud reports relating to the EasyJet data breach between May 18 to 24. (Daily Mail, p49, print only)

Companies will be barred from putting any more workers into the furlough scheme under plans to be unveiled by the chancellor this week. The scheme is also being made more flexible to allow employers to bring furloughed workers back part time (Daily Mail, p2).

Rising eurozone government debt levels could "reignite pressures" on more vulnerable countries in the region as investors reassess sovereign risk, the European Central Bank has warned (Financial Times, p1, £).

Two-fifths of UK home buyers and sellers have put their property plans on hold following the coronavirus crisis (Financial Times, £, online only).

Mortgage experts are warning homeowners against extending payment holidays unless absolutely necessary, as it could cost them thousands in the longer run (Daily Express, p34, print only).

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