Will Rishi Sunak’s £350bn coronavirus package rescue the economy?

Chancellor Rishi Sunak yesterday said the government will do “whatever it takes” to support the UK economy through the coronavirus crisis, as Boris Johnson promised to put the country on a “wartime” footing.

Sunak unveiled an “unprecedented” £330bn loan scheme to support businesses, alongside a raft of “direct support” measures including tax cuts, millions in grants and three month “mortgage holidays”.

Addressing the press, Sunak said the UK has “never in peacetime faced an emergency like this”, adding that he would abandon “orthodoxy” and “ideology” in response.

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What has the Chancellor promised?

Sunak announced £330bn of government-backed loans for businesses and another £20bn in direct cash support less than a week after an initial £7bn package announced in the budget.

People struggling to pay their mortgages will be given payment holidays of up to three months, while Sunak also said: “We want to build a bold and ambitious employment support package.”

According to The Times, the Treasury is looking into options for where this funding could come from, as it could cost billions of pounds more than the £32bn already pledged to fight the effects of the coronavirus.

In another eye catching annoucement, Sunak also said that he would give all retail, hospitality and leisure businesses a one-year holiday from their business rates bill.

Does the plan go far enough?

“There are still holes in the vast plans,” writes BBC political editor Laura Kuenssberg. “It’s not yet clear what will happen to people who rent their homes rather than have mortgages.”

The chancellor has faced criticism for including “mortgage holidays” in the stimulus package while failing to address the needs of people who rent.

However, he did say that Housing Secretary Robert Jenrick will announce new measures to “protect” people who rent shortly.

The Guardian reports the £330bn loan package can be viewed as “merely a large sticking-plaster,” adding that “a loan is not a handout”. 

Ian Cass, managing director of the Forum of Private Business, echoed this, telling The Times: “A loan is not going to solve the problems of a company that’s on the brink, it risks pushing the problem down the road.”

However, Sky News economics editor Ed Conway, said that the £330bn loan guarantee “might represent the difference between life and death for a restaurant or retailer considering whether they can make it through the next 12 months”.

Conway added while it may keep businesses afloat, “it is unlikely to prevent them laying off workers” and “there will still have to be another scheme to support those who lose their jobs”.

Labour leadership hopeful Keir Starmer attacked the plans, arguing in The Guardian that “the Chancellor's stimulus package doesn't go nearly far enough”.

Pointing to the lack of support for renters, social care and local authorities, Starmer called on Sunak to commit to making regular financial statements throughout the pandemic to allow Parliament to “subject the government’s approach to effective scrutiny”.