News in brief - 30 June 2020

OVER ONE MILLION UK BUSINESSES SUPPORTED UNDER COVID-19 LENDING SCHEMES

The banking and finance industry has supported more than one million businesses through the three government-backed lending schemes in just over three months, figures published by HM Treasury today have revealed.

Almost 1.02 million facilities worth £42.9 billion have been approved through the Coronavirus Businesses Interruption Loans Scheme (CBILS), Bounce Back Loan Scheme (BBLS) and Coronavirus Large Business Interruption Loan Scheme (CLBILs).

The support demonstrates the significant steps taken by lenders to make sure viable businesses of all sizes have access to the support they need to get through these challenging times.

To put the one million milestone in context, in the past five years the ten largest banking groups have approved an average of 275,000 loans and overdrafts each year to UK SMEs, equivalent to 70,000 facilities every three months. The one million government-backed facilities approved over three months is around 14 times higher than this quarterly average, as lenders work hard to meet unprecedented demand for finance from SMEs.

Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said:

?These figures shine a light on the unprecedented levels of support from lenders to help get businesses through these challenging times.

?The fact that over one million businesses are receiving support through the coronavirus loan schemes is a credit to bank staff up and down the country who have worked tirelessly to get finance to those who need it.

?Almost £43 billion has now been approved through these schemes, in addition to the industry's broad package of support for businesses including overdraft extensions and capital repayment holidays.

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

APPROVALS ON NEW HOME LOANS FALL TO RECORD LOW

Mortgage approvals in Britain fell to the lowest level on record last month due to the lockdown, down from 15,800 in April to 9,273 in May, according to the Bank of England (The Times, £, p34). The number of new home loans approved was almost 90 per cent lower than it was in February and 70 per cent lower than in the weakest month during the financial crisis. Prior to the lockdown, approvals stood at more than 70,000 per month and despite the reopening of estate agents from the middle of May, last month's figures reveal that approvals were a lot lower than the financial market prediction of 25,000 approvals (The Guardian, p31).

Meanwhile, the Bank of England also revealed that household deposits increased by £25.6 billion to £1.5 trillion last month, its highest increase on record (Financial Times, £, p2). Consumers continued to avoid borrowing, with net credit contracting by £4.6 billion last month, while businesses raised £11.4 billion from banks and financial markets in May following strong borrowing in the previous two months.

NEWS IN BRIEF

In a letter featured in the Daily Mail (print only, p58) today, Managing Director of Personal Finance, Eric Leenders writes how the finance and banking industry is committed to providing customers with a range of ways to pay that best suit their needs.

The Treasury will announce today that it is changing the eligibility criteria for the Future Fund scheme, to allow entrepreneurs who have moved their legal headquarters overseas to raise funds to participate (The Times, £, p34).

The Treasury has announced that it needs to borrow another £50 billion in August to meet its financing needs, bringing borrowing to £275 billion in the opening five months of the financial year (The Telegraph, £, p1).

The prime minister Boris Johnson will today announce a £5 billion programme of accelerated capital spending on hospitals, roads, rail, prisons, courts, schools and high streets in order to help rebuild the UK economy (The Times, £, p1).

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