News in brief - 6 April 2020

TREASURY CONSIDERS CASH INJECTION FOR MEDIUM-SIZED BUSINESSES

The Treasury is considering injecting cash into medium-sized businesses to provide them with longer-term support than they receive from loans. The Times (£, p34) says the plan could be executed through the Business Growth Fund and would be similar to the way in which 3i was used after the Second World War to help small and medium-sized businesses that could not raise equity in public markets.

According to City AM, a top City figure has been approached by the government to assemble a so-called ?bailout taskforce? that would put funds into businesses in exchange for equity stakes. The Telegraph (£, online only), reports that the leader of the group is expected to bring in a team from top investment banks and be ?ready to sit down and do deals?.

Separately, the Treasury is considering proposals on how best to support start-ups to ensure Britain's most innovative businesses survive the crisis (Financial Times, £, p3). Some start-ups are lossmaking and are therefore not eligible for the new government-backed loan scheme for small companies.

CORONAVIRUS LOCKDOWN TO COST ECONOMY £2.4 BILLION A DAY

The coronavirus lockdown will cost the economy £2.4 billion a day for as long as it lasts and consumer confidence has crashed to its lowest level since the financial crisis (The Times, £, p33). According to the Centre for Economics and Business Research (Cebr), shutting down the economy will reduce Britain's gross domestic product by 31 per cent as social restrictions prevent businesses from functioning. City AM reports that the UK's finance and insurance sector has seen output fall by 18 per cent.

Meanwhile, The Guardian (p19) reports that women and the under-25s have borne the economic brunt of the coronavirus lockdown, according to the Institute for Fiscal Studies (IFS). The worst-affected industries, including hospitality and retail, are staffed disproportionately by young people and women on low pay. Retail businesses continue to struggle during the crisis with companies preparing to file for bankruptcy and filing notice of intention to appoint administrators (City AM).

Companies that have been shut down during the coronavirus crisis employ 30 per cent of all employees under the age of 25, and women are one third more likely to work in an affected industry than men (The Times, £, p2).

NEWS IN BRIEF

More than half a million property sales will be lost this year as the market freezes and prices fall by three per cent, according to Knight Frank (The Guardian, p31).

The Bank of England (BoE) governor Andrew Bailey has rejected suggestions the central bank should use monetary financing to protect and boost the economy amid the coronavirus crisis (Financial Times, £, p3).

The public's expectations for inflation in the year ahead surged in March when the pound plunged as the coronavirus outbreak escalated, according to Citi and polling from YouGov (Reuters).

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