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There Is No Panacea for the Coronavirus Economy



Even under optimistic scenarios, restoring the economy to health is going to be an extended and difficult task.Photograph by Spencer Platt / Getty

The stock market posted another strong performance on Friday, with the Dow Jones Industrial Average rising more than seven hundred points. It has now regained about half of the losses it suffered between late February and late March, as the death toll from the coronavirus mounted and great swaths of the economy were closed down. Indeed, the market is only about eighteen per cent below its all-time peak, which came on February 12th.

Investors were reacting to some encouraging news about a possible treatment for people hospitalized with COVID-19 and to the prospect of parts of the economy reopening soon. On Friday, Texas announced the lifting of some restrictions, and Michigan’s governor, Gretchen Whitmer, expressed the hope that some of her state’s economy could “re-engage” as early as May 1st. These developments came a day after the White House released a set of guidelines for reopening the economy, which envisage a three-stage process, with states moving from one stage to the next as they meet various “gating criteria” related to the incidence of the virus, testing capacity, and hospital capacity.

Within the past week, the virus claimed roughly two thousand lives a day in the United States. Within one twenty-four-hour period, more than forty-five hundred people had died from COVID-19 and the President’s medical advisers have acknowledged that any reversal of the shutdowns, even a limited one, will be risky. Some Asian territories that seemed to have the virus under control, including Japan, Hong Kong, and Singapore, recently experienced a second wave of infections. The possibility of something similar happening here surely explains why Trump, in a conference call with governors on Thursday, said, “You are going to be calling your own shots.” “Trump’s the-buck-stops-with-the-states posture is largely designed to shield himself from blame should there be new outbreaks after states reopen or for other problems,” the Washington Post reported, citing current and former Administration officials who have been involved in the crisis response.

Despite a month of shutdowns and distancing measures, the virus hasn’t stopped spreading, but the rate of new infections has gone down. At a national level, based on figures from the Covid Tracking Project, the number of cases is rising by about 4.7 per cent, which is down from about 7.5 per cent a week ago. Ian Shepherdson, the founder of Pantheon Macroeconomics, has been looking at what’s happening in other countries, too. In the past week or so, Germany, Spain, and Italy have announced limited steps to reopen stores and other businesses. These countries waited until the daily new infection rate had fallen to a bit below the current U.S. level, Shepherdson said. By this time next week, the U.S. rate may well have closed that gap.

In absolute terms, however, the number of new infections is still much higher in the United States, because the over-all number of cases is so large. So far, most governors, Republican and Democrat, have resisted the idea of lifting stay-at-home orders. But the economic cost of the shutdown is rising—in the past four weeks, more than twenty-two million Americans have lost their jobs or been furloughed, figures released on Thursday showed. And in some Democrat-run states, conservative protesters have staged demonstrations against the restrictions, with Trump openly egging them on.

The big question is what will happen if some businesses do start to reopen. Shepherdson said that the outlook in the United States is complicated by a pattern of infection that varies greatly across regions and states. “If you are in a state that has done well, the danger is that if you open up you could get flooded by people from next door,” he said. He cited the experience of Rhode Island, which is situated between two hot spots—New York and Boston—and where the number of cases is still rising by about nine per cent a day.

Practically everybody agrees that comprehensive testing will be vital going forward. For example, in “National Coronavirus Response: A Road Map to Reopening,” released at the end of March, the American Enterprise Institute, a conservative think tank that carries influence at the White House, said that we need “better data to identify areas of spread and the rate of exposure and immunity in the population.” During Thursday’s briefing about the Administration’s new guidelines, Dr. Deborah Birx, the coördinator of the White House’s virus-response task force, claimed that the necessary data would be available from three different sources: test results from people exhibiting COVID-19-like symptoms; reports of influenza-like symptoms across the country; and expanded “sentinel surveillance”—i.e., testing of people in high-risk areas, such as indigenous communities, nursing homes, and “inner-city federal clinics.” Right now, about a hundred and twenty-five thousand tests are being carried out each day. By the end of April, the U.S. will have administered more than five million tests in total, Vice-President Mike Pence said at Thursday’s briefing.

But many governors, medical experts, business leaders, and economists are highly skeptical about the extent of testing, which is still largely confined to people who have already developed symptoms. The key to keeping down the infection rate is locating and isolating asymptomatic carriers and then doing contact tracing.

“The reality is we are not even testing health-care workers,” Paul Romer, a Nobel-winning economist who is a professor at New York University, told me on Friday. “We need to be testing all of them regularly, and many others, too. Trump’s medical advisers are stuck with blinkers on. They are not stepping back and looking at the big picture.’’ In Romer’s view, this involves creating a public-health strategy that can be sustained for a year or eighteen months, until a vaccine is developed. The only available options, he said, are continued shutdowns or a massive expansion of testing to find and isolate asymptomatic carriers before they spread the disease. Romer, who served as the chief economist at the World Bank from 2016 to 2018, is calling for at least ten million tests per day, and ideally as many as twenty million or thirty million.

Absent large-scale testing, the outlook is grim, he said. “As soon as we stop the shutdowns, we’ll go right back to exponential growth. It won’t even help us much if we get down to very low rates of infection first, because exponential growth is so fast you get right back there very quickly.” Given the limits to testing capacity and the Trump Administration’s refusal to take the lead in this area, Romer suggested that the most likely outcome is a series of reopenings and renewed shutdowns, as the infection rate rebounds. “From an economic perspective, that is almost as bad as a permanent shutdown,” he said. “Nobody is going to invest. Nobody is going to reopen a restaurant.”

Not everybody agrees with that analysis, of course. But there is general agreement among economists that even under optimistic scenarios, where the rate of infection doesn’t shoot back up immediately, restoring the economy to health is going to be an extended and difficult task. “Absent a vaccine or treatment breakthrough, reopening will be gradual,” the economists at Goldman Sachs wrote this week. “Several other countries have taken steps toward reopening. We see three lessons from their experiences. First, initial reopening timelines often prove too optimistic. Second, even countries at the forefront of reopening have gradual and conservative plans. Third, recovery is easier and quicker in manufacturing and construction than in consumer services.”

Today’s American economy is predominantly a service economy, of course. Private-service industries, such as retail, finance, lodging, entertainment, and restaurants, contribute close to seventy per cent of the gross domestic product. Even if some restaurants do defy Romer’s prediction and reopen, they will have to meet social-distancing requirements, which will reduce their capacity. The same goes for airlines, hotels, gyms, and many other businesses. “No amount of stimulus spending is going to change those realities,” Shepherdson said. He is predicting that G.D.P. will plummet at an annualized rate of thirty per cent in the April-to-June quarter, before rebounding somewhat, but not fully, in the second half of the year. For 2020 as a whole, Goldman Sachs is predicting that G.D.P. will decline by more than five per cent. That would be the biggest fall since the aftermath of the Second World War.

For now, the stock market is focussing on the upside. Shepherdson said that institutional investors, whose performance is often measured against the market, can’t afford to miss out on a rebound, and they are placing a great deal of faith in the Federal Reserve. “If you are out of the market now, you are fighting against the momentum, you are fighting the stimulus, and you are fighting the Fed,” he said. “The only thing you have going for you is the truth—the recovery is going to be very slow, and on the virus front there are going to be relapses.”



Source: – The New Yorker

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If Donald Trump drags the U.S. economy down, Canada's economy is going along for the ride – Toronto Star



From economy to psychology, from environment to diplomacy, what happens in the U.S. election will have a profound impact on Canada. Northern Exposure is a series of stories looking at what’s at stake for us as America decides its future.

WASHINGTON—“Over the years I have learned,” a reader in British Columbia wrote to me this week, “that when the U.S. coughs, Canada gets a very bad cold, perhaps the flu,” The saying has a particular resonance during a pandemic, but in few areas is the analogy more apt than when it comes to the economy.

Roughly a fifth of Canada’s gross national product comes from exports to the U.S., which accounts for roughly 75 per cent of Canada’ foreign trade. The U.S. is also Canada’s largest source of foreign investment. As of 2011, U.S. subsidiaries in Canada employed more than 546,000 people.

“Our proximity to the U.S. is a huge source of our prosperity. We live next to such a massive market that is that is willing to do business with us, right?” said Peter Loewen from the University of Toronto’s Munk School of Global Affairs and Public Policy. “People shouldn’t underestimate that. These levels of wealth are all recent, and they come from our capacity to trade.”

And when it comes to trade, the presidency of Donald Trump induced some coughing fits among Canadians — or at least some gagging sounds — when he imposed import tariffs and forced the renegotiation of the North American Free Trade Agreement by threatening to tear it up. It’s been a turbulent time.

Considering the upcoming election, veteran trade lawyer Daniel Ucjzo of Dickinson Wright in Ohio would expect that volatility to change if the administration did. “I mean, it wouldn’t be trade policy by tweet,” he said in a recent phone interview.

“This relationship revolves around the relationship between the leaders, whether we like it or not,” Ujczo said. If Trump is reelected and Trudeau remains prime minister, “I think we’ll see pretty much more of the same — and there will need to be a focus on a more constructive relationship between those two.”

If Trump’s Democratic opponent, Joe Biden, were to be elected, however, Ujczo foresees a stronger relationship, between both the leaders and their cabinet-level officials.

He’s not the only one who thinks so. Kathryn Friedman, an expert on North American relations at the University at Buffalo, points out that when Biden was the U.S. vice-president, his last official visit was to Ottawa, where he praised Canada as an ally and a friend; by contrast, Trump and his administration often portray Canada as a national security threat and a predatory trader. Under a Biden administration, Friedman said, “I do think that Canada would be elevated back to its rightful place as one of our closest allies.”

But that relationship, paradoxically, might not make much difference to actual trade policy. The experts I’ve spoken with more or less agree that despite its adversarial and sometimes tortured negotiation, the new USMCA trade deal is a good update on the old NAFTA. No prominent American politicians — and few Canadians — are itching to change it.

Ujczo says he’d expect a less “disruptive” second term from Trump on continental trade, since he’s already laid the groundwork for a new playing field in his first term. But more than that, the Democrats’ trade policy ideas, especially among the congressional delegation, aren’t substantially different from Trump’s protectionist impulses.

“Canadians always think that Democrats are more favourable because they’re aligned on socio-cultural ideology, but Democrats have really not been great for Canada on trade issues,” he said. “I do think we would see more predictability from the White House, but I anticipate less predictability from Congress.”

A Biden administration, meanwhile, would likely cancel the Keystone XL pipeline, a project to which Canada’s oil industry and governments are deeply committed.

Biden would also bring the United States back into the Trans Pacific Trade Partnership “within the first week or so” of his administration, according to Chris Sands, who leads the Canada Institute at the Wilson Center in Washington. “What does that mean for Canada, which is already a member? Well, good news, bad news,” said Sands. “Suddenly you’ve got another competitor in that family and you lose one of the little advantages you had over the U.S.”

Aside from direct trade issues, the Canadian economy generally feels the strength or weakness of the American economy through investment, jobs at American corporations and tourism, among other things. That means Canada will be watching its neighbour’s recovery from the COVID-19-induced recession very closely.

In managing the virus itself, probably a precondition of a full recovery, Trump has graded his response this year an “A+” while pinning virtually all hope for a quick economic recovery on the quick development of a vaccine.

Biden has announced a more aggressive response to the spread of the virus, in line with what many epidemiologists have recommended, which may include locking down some areas of the country again or implementing national rules on masks. Biden has also staked part of his economic platform on stimulus, sometimes invoking Franklin Roosevelt’s Great Depression-era New Deal as a parallel.



Polls show many American voters see the economy, and the prospects for dealing with it, as an area of strength for Trump. By contrast, 13 Nobel Prize-winning economists issued a statement this week supporting Biden, saying his economic policies “will result in economic growth that is faster, more robust, and more equitable.”

That said, predicting the trajectory of the American economy under any president is a very difficult job.

What isn’t difficult to see is that whatever direction it goes, it is likely to take Canada’s economy at least some of the way with it.



How closely are you following the election south of the border? Share your thoughts.

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.

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Why the U.S. Risks Repeating 2009’s Mistakes as the Economic Rebound Slows – The New York Times



Trillions of dollars in federal aid to households and businesses has allowed the U.S. economy to emerge from the first six months of the coronavirus pandemic in far better shape than many observers had feared last spring.

But that spending has now largely dried up and hopes for a major new aid package ahead of the Nov. 3 election are all but dead, even as the virus persists and millions of Americans remain unemployed. Already, there are signs that the economic rebound is losing steam, as some measures of consumer spending growth decelerate and job gains slow. Applications for jobless benefits rose last week, with about 825,000 Americans filing for state unemployment benefits.

The combination of a moderating economic rebound and fading government support are an eerie echo of the weak period that followed the 2007 to 2009 recession. In the view of many analysts, a premature pullback in government support back then led to a grinding recovery that left legions of would-be employees out of work for years. In recent weeks, prominent economists have warned that both the United States and Europe, where many early responses are drawing to a close, were at risk of repeating that mistake by cutting off government aid too soon.

“The initial response was good, but we need more,” said Karen Dynan, who was chief economist at the Treasury Department in the Obama administration and now teaches at Harvard. The decision to pull back on spending a decade ago, she said, “really prolonged the period of weakness after the great recession.”

In Europe, some national governments that have spent aggressively to subsidize wages and curb layoffs are wrapping up those efforts. While large countries including Germany have indicated that they remain willing to provide more support, some economists warn that continued aid announced in France and elsewhere might fall short of what is needed in the near term.

In the United States, the situation is more immediately worrying. Leaders of both major political parties have expressed support, at least in theory, for additional aid. But the parties remain far apart, with Democrats pushing for a large package and Republicans arguing that a smaller plan will suffice.

The ability to reach a compromise in the coming weeks has been further complicated by a looming confirmation battle to replace Ruth Bader Ginsburg on the Supreme Court.


“That’s my great concern, that we’re going leave and not have a stimulus Covid package put together,” Senator Roy Blunt, Republican of Missouri, said Thursday.

Top Democrats, responding in part to growing concern among moderate lawmakers about the stalemate over providing aid, were working on a scaled-back package, according to a person familiar with the plans. It remains unclear whether the House will vote on such a measure, which would provide roughly $2.4 trillion in aid, or whether negotiations will resume in earnest.

One factor making a quick agreement even less likely: The economic revival is slowing, but not as sharply as some economists predicted would happen once expanded unemployment insurance and other programs began to ebb.

Credit…Amr Alfiky/The New York Times

Job growth slowed in July and August but remained positive. Consumer spending, which rebounded sharply once federal money started flowing in April, has likewise seen a more gradual rebound but has not fallen. Layoffs, as measured by claims for unemployment insurance, have continued to trend down, although they remain high by historical standards.

But many economists said that allowing the economy to slow at the current moment — with millions out of work or underemployed — could lead to long-term economic scarring. Employers have still hired back less than half of the 22 million workers they laid off in March and April, and the unemployment rate is higher than the peak of many past recessions. Even optimistic forecasts imply that gross domestic product will shrink more this year than in the worst year of the last recession.

“A stalling recovery when we’re stalling at near the worst point of the great recession is a terrible outcome,” said Tara Sinclair, an economist at George Washington University.

Jerome H. Powell, the Fed chair, made clear during congressional hearings this week that the economy, while recovering, would likely need more support.

“The power of fiscal policy is unequaled, by really anything else,” Mr. Powell said during testimony before a House subcommittee on Wednesday. “We need to stay with it, all of us,” adding, “the recovery will go faster if there’s support coming both from Congress and from the Fed.”

Credit…Pool photo by Kevin Dietsch

His colleague Eric Rosengren, president of the Federal Reserve Bank of Boston, said Wednesday that additional fiscal policy “is very much needed” but noted it “seems increasingly unlikely to materialize anytime soon.”

Some economists warn that the economy could begin to shrink again if Congress doesn’t act. Many households were able to save in the spring, thanks to federal aid and shutdown orders that kept them from spending money on restaurant meals and hotel stays. Households socked away about one-third of their disposable incomes in April, and while the savings rate has come down since, it remained sharply elevated from pre-crisis levels through July. That should create some buffer.

But those funds won’t sustain jobless families indefinitely now that extra unemployment benefits have expired and a partial supplement supported by repurposed federal funds is on the brink of running out. And businesses that were kept afloat during the summer may struggle when colder weather puts an end to outdoor dining and other activities.

There is an alarming precedent for what happens when support fades in the midst of an uncertain economic moment.

In the early stages of the 2008 financial crisis, Congress and the White House — first under President George W. Bush, then under President Barack Obama — pumped billions of dollars into the economy in the form of tax cuts for individuals and companies, infrastructure spending, extended unemployment benefits and other measures.

But Mr. Obama was unable to win approval for further large-scale stimulus efforts, and by 2010 Congress had effectively ceded to the Federal Reserve the job of managing the still-tenuous economic recovery.

“The lesson from the last crisis is that we had elevated unemployment for years, and it was a slow grind to work that down,” Robert S. Kaplan, president of the Federal Reserve Bank of Dallas, said in an interview Monday, explaining that he supports extending fiscal aid. “We have a chance here, if we act quickly, to mitigate the lasting damage that we saw.”

The post-financial crisis pullback in government spending was even more dramatic in Europe, where austerity was enforced across countries with weaker economies and higher debt levels, and where the European Central Bank raised interest rates in 2011, removing monetary support years before the Fed first lifted rates in late 2015. Another slump ensued across European economies, bringing with it years of high unemployment, low inflation and weak growth.

There are important differences between the two crisis eras, especially in the United States. The economy was far stronger before the pandemic hit than in 2007, when inflated home prices, risky lending and financial engineering left the banking system vulnerable. And policymakers responded far more quickly and aggressively this time around.

The Fed cut interest rates close to zero in March, before data showing widespread economic damage had even begun to emerge. In the last crisis, the Fed didn’t take that step until the end of 2008, a year after the recession had begun. The European Central Bank rolled out massive bond-buying programs, something monetary policymakers in the currency block resisted in the immediate aftermath of the 2009 crisis.

But central banks have less room to adjust their policies to bolster growth now than they did a decade ago. Interest rates and inflation have fallen to low levels across advanced economies, stealing potency from monetary policy tools that work by making credit cheap.

That’s where fiscal policy — elected officials’ ability to tax and spend — comes in. Economic theory suggests that fiscal policy can be effective at times when monetary policy is not.

Initially, policymakers across advanced economies seemed far more willing to spend heavily and amass huge deficits than they were during the last crisis, at least in part because the same low interest rates robbing central banks of their power have made payments on government debt cheaper.

In the early days of this crisis, Congress approved legislation that sent direct payments to most American households, established a small-business assistance program and added $600 a week to unemployment checks, while expanding the system to cover millions more jobless workers. Together, the programs dwarfed the response to the last recession.

Credit…Joseph Rushmore for The New York Times

The aggressive response was successful. After shedding millions of workers in March and April, companies began bringing them back in May and June. Stimulus checks and that extra $600 per week lifted personal incomes in April and May, buoying spending. A predicted wave of foreclosures and evictions largely failed to materialize. By August, the unemployment rate had fallen to 8.4 percent, defying expectations that it would remain in double digits into next year.

Mr. Powell said government spending should get “credit” for the pace of the rebound but warned that risks remain if key programs are allowed to permanently lapse. As unemployed workers run through their savings, they might pull back on spending and lose their homes, he said during Senate testimony on Thursday.

Without more help “we’ll see sooner or later, probably sooner, that the economy has a hard time sustaining the growth that we’ve seen — that’s the risk,” he said.

Economists said Mr. Powell appears to have learned a lesson from the aftermath of the last recession: When the Fed is forced to try to rescue the economy on its own, the result is a painfully slow recovery that takes years to reach many of the most vulnerable households.

The consequences of another slow recovery would almost certainly fall disproportionately on low-income families, many of them Black and Hispanic. Those workers were among the last to benefit from the plodding recovery after the last recession, and have been among the hardest hit by the current crisis.

“This pandemic, and our efforts here, could very well create even greater inequality in our nation than there was even before the pandemic,” said Representative Andy Kim, Democrat of New Jersey and a former Obama administration official. “Some are going to be able to get through this much, much better than others, and those that are not? This is one of those once in a lifetime situations that could very well cripple them for a generation if we don’t take some of the necessary steps in the next few weeks and months.”

Peter S. Goodman and Emily Cochrane contributed reporting.

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Chancellor outlines Winter Economy Plan – GOV.UK – GOV.UK



  • central to plan is a new Job Support Scheme and extension of Self Employment Income Support Scheme
  • and over one million businesses will get flexibilities to help pay back loans

The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK.

Delivering a speech in Parliament, the Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus.
The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

The Chancellor of the Exchequer Rishi Sunak said:

The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery…

Our approach to the next phase of support must be different to that which came before.

The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.

Since the beginning of the pandemic, the government has taken swift action to save lives, limit the spread of the disease and minimise damage to the economy.

Ministers have introduced one of the most generous and comprehensive economic plans anywhere in the world with over £190 billion of support for people, businesses and public services – including paying the wages of nearly 12 million people, supporting over a million businesses through grants, loans and rates cuts and announcing the Plan for Jobs in July.

The government has been consistently clear that it would keep its support under review to protect jobs and the economy, with today’s action reflecting the evolving circumstances and uncertainty of the months ahead.
The package of measures, which applies to all regions and nations of the UK, includes:

Support for workers

A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.

In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.

It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.

In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring our support continues right through to next year.
This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.

Tax cuts and deferrals

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

On top of this, around11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Giving businesses flexibility to pay back loans

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.

We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.

Investment in public services

At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7 billion of additional funding has been approved by the Treasury, including £24.3 billion since the Summer Economic Update in July.

This funding has helped ensure the procurement of PPE for frontline staff, provided free school meals for children while at home and protected the country’s most vulnerable. In addition, the £12 billion funding to roll-out the Test and Trace programme has played a key role helping to unlock the economy, enabling businesses like restaurants and bars to serve customers again.

As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7 billion in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.

Responses from business groups

Dame Carolyn Fairbairn, CBI Director-General, said:

These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.

Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.

The Chancellor has listened to evidence from business and acted decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.

Mike Cherry OBE, Federation of Small Businesses National Chair, said:

The UK’s small businesses are facing an incredibly difficult winter. Today’s support package is the flipside of the coin to Tuesday’s COVID-19 business restrictions.

It is a swift and significant intervention, extending emergency SME loans, creating new wage support for small employers and the self-employed, and providing cashflow help on VAT deferrals and new Time To Pay for any tax bills to HMRC.

We welcome that the Chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces.

BCC Director General Adam Marshall said:

The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help preserve livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.

The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new wage support scheme will help many companies hold on to valued employees after furlough ends, and the extension of business lending schemes and tax forbearance will lessen the immediate pressure on cash flow for many affected firms.

As we look past the immediate challenge, more will need to be done to rebuild and renew our economy. Chambers of Commerce across the UK will continue to work with government to ensure the benefits of these schemes are delivered to firms on the ground.

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