In a statement to lawmakers, Sunak said half a million firms have taken advantage of the government’s Coronavirus Job Retention Scheme, which sees the government pay up to 80% of the salaries of workers put on furlough up to 2,500 pounds ($3,075) a month.
Without the scheme, many of those jobs would likely have been lost as much of the British economy has been closed to contain the outbreak. Still, the contraction in economic activity is set to be as deep as any in living memory, with many economists predicting a rise in the unemployment rate in coming months to at least 10% from near 45-year lows of 4%.
“While our interventions have saved millions of jobs and businesses, we can’t save every job and every business,” Sunak said. The British government has launched a series of interventions to limit the economic damage that it says have provided over 15 billion pounds for businesses in just a few weeks.
Sunak announced a new scheme Monday that will see the government guarantee the full value of loans to struggling small businesses. He said he wasn't convinced about the argument of making the 100% loan guarantees available to big companies as well.
“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may in some cases have very little prospect of paying those loans back, and not necessarily because of the impact of the coronavirus,” he said.
Sunak said small firms — the lifeblood of the British economy — will now be able to borrow between 2,000 pounds ($2,500) and 50,000 pounds ($61,500), money that they will be able to access within days and interest-free for the first year.
The new scheme follows criticism of existing lending programs ,with smaller firms reporting difficulty in getting the money from banks who had to underwrite 20% of the loan's value. “This crucial new initiative should enable thousands of small businesses to access the working capital they need quickly, helping to protect the millions of jobs they provide in every part of the U.K.," said Mike Cherry, chairman of the Federation of Small Businesses.