UK, Europe devise furlough schemes, bailouts for coronavirus-hit private sector

 “This is t a time for ideology and orthodoxy. This is a time to be bold. A time for cour,” said Rishi Sunak, UK’s Indian-origin finance minister, as he summed up British government’s approach towards daunting ecomic fightback against vel coronavirus pandemic and broly reflective of approach taken by most or countries across Europe.

words from a landmark speech last month by a Chancellor of Exchequer from UK’s ruling Conservative Party, tritionally staunch believers of free market principles, unleashed an unprecedented set of state measures targeted at protecting jobs and incomes for private sector as country went into lockdown mode to try and curb spre of dely virus.

“ coronavirus pandemic is a public health emergency. But it is also an ecomic emergency. We have never, in peacetime, faced an ecomic fight like this one,” said Sunak, as he tabled a series of mini-Budgets just days apart over last few weeks to revive country’s ecomy.

He began by anuncing an unprecedented pack of government-backed and guaranteed loans to support businesses – big and small.

An initial 330 billion pounds of guarantees – equivalent to 15 per cent of UK’s GDP – was me available, with a promise of more as required.

This meant any business requiring access to cash to pay ir rent, salaries of ir employees, suppliers, or to purchase stock, h option to access a government-backed loan on attractive terms.

Soon hedge-fund-manr-turned-finance-minister bolstered this offer furr, introducing UK to a lesser-kwn termilogy – furlough or forced leave.

Under Coronavirus Job Retention Scheme, companies w have option to furlough some or all of ir staff and seek a government grant to pay m 80 per cent of ir monthly salaries up to 2,500 pounds a month – to prevent m from forced redundancies or sackings.

scheme went up and running this week and h attracted 140,000 requests to join, instantly saving nearly 1 million jobs.

UK government has since unveiled a series of furr measures including VAT waivers and tax payment holidays, including for those classified as self-employed tax-payers within private sector with Self-Employed Income Support Scheme.

Besides, over 700,000 retail, hospitality and leisure businesses have h ir business rates waived for this year.

Most recently, Sunak was back at Downing Street podium to anunce a Future Fund, a 500 million pounds loan scheme for high-growth companies, including start-ups, that may be struggling through lockdown.

re are some reports that UK Treasury is considering offering 100 per cent guarantees on loans of up to 25,000 pounds for UK's smallest firms as a furr step.

“We are making great progress on getting much-needed support out to businesses to help man ir cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across country,” Sunak declared, claiming that his serial measures for businesses through crisis is most “comprehensive” set of policies put in place by any ecomy of world.

However, a number of or European ecomies have also been putting unprecedented measures in place to help private sector tide through lockdown on usual ecomic activities.

European Union (EU) has been working on its own set of collective policies for its member-countries, which would exclude UK in long term as it formally left 27-member ecomic bloc at end of January.

“This pandemic is putting our societies under serious strain. well-being of each EU member state depends on well-being of whole of EU. We are all in this toger,” European Council President Charles Michel recently said.

EU leers have agreed to task European Commission with revamping EU's next seven-year budget and devising a recovery plan.

While figure was put on that plan, officials believe that 1-1.5 trillion euros may be needed.

uneven impact of coronavirus within member countries, with Italy and Spain particularly hard hit and Germany, Austria and Nerlands on lower end of scale, has caused some unease about true scale of measures.

In France, government has taken steps such as deferring tax payments, with small companies of less than 20 employees able to apply for emergency aid of up to 10,000 euros.

Germany has put in place an estimated 1-trillion euros pack of measures, which includes money to tide small companies and individual entrepreneurs through closures that have frozen business activity, and to pump capital into bigger companies where needed.

Under plans cleared by Chancellor Angela Merkel, self-employed people or private sector companies with up to five employees will be able to seek payments of up to 9,000 euros each over three months.

figure will rise to up to 15,000 euros for companies with up to 10 employees.

On whole, what pandemic has proved is that free market principles and survival of most competitive businesses are ories that work only under a business as usual scenario.

When encountered with biggest health and ecomic crisis in a generation, state interventions and a helping hand from government becomes critical.