Yesterday, prime minister Boris Johnson advised everybody not to venture out of their homes apart from non-essential journeys such as work and food shopping – leaving millions of small businesses in limbo, faced with either having to make staff redundant and yet unable to claim on business insurance because the government, unlike as in Italy and Spain, has not made the coronavirus lockdown official.
The British Beer and Pub Association warned that “thousands of pubs and hundreds of thousands of jobs will be lost in the very short term” unless the government bails it out.
Whatever Sunak announces in his Treasury small business stimulus package will build on the £30bn spending package he announced in last Wednesday’s Budget but now seen as insubstantial given the onslaught of the crisis.
What can Rishi Sunak do?
- A People’s Quantative Easing Former Goldman Sachs Asset Management chairman and government minister Jim O’Neill has called for a “People’s Quantative Easing” – basically, injecting money into people’s bank accounts.
- Suspend business rates entirely This would cost the Treasury £31.5bn or about 4 per cent of revenues expected to be raised.
- Temporary VAT cut Cutting the VAT rate by 1 percentage point would cost the Treasury £6.5bn but would help get scared consumers spending again.
What have other countries done to help small businesses?
Compared to the UK’s £30bn coronavirus fightback package, France has announced a €300 billion (£273bn) “guarantee” that no French firm would go bust as a result of the country going into lockdown. French measures to help companies and employees weather the coronavirus storm will be worth some €45bn, the country’s finance minister Bruno Le Maire said on Tuesday.
The Danish government will compensate as much as 75 per cent of the wages of businesses, providing they do not making people redundant. Companies claiming must be in danger of having to cut at least 30 per cent of their workforce or 50 people or more.
The Italian government has greenlit a €25bn package, suspending all tax payments until the end of May, compensating up to 60 per cent of commercial lease costs for businesses and guaranteeiing loans of up to €5m for small and medium-sized companies.
The Spanish government has announced a €17bn package – equivalent to about 1.4pc of GDP – which includes tax and social security credits and almost €4bn for its health services.