By Powerscourt on 06/02/2021
The Bank of England’s Deputy Governor, Sam Woods, has warned that although banks in Britain have been economically shielded from the worst of the pandemic, the toughest time is still yet to come.
Speaking on a webinar for the London School of Economics yesterday, Woods said that as government furlough schemes and guarantees from banks to companies wind down, banks will start to feel the truer brunt of the crisis.
“We feel good about what’s happened so far but, in a way, the tougher bit is coming,” he claimed.
His concerns came just a few hours before the government announced that UK firms who took out loans under a COVID-19 scheme will have a bit more leeway with paying them back.
Almost £45million has been borrowed by more than 1.4 million UK companies under the Bounce Back Loan scheme, which allows banks to lend up to £50k with 100% state backing.
The new measures will give companies with outstanding loans an option to further pause interest on the repayments, pause repayments entirely and, most crucially, extend the length of their loans from 6 years to 10.
The Chancellor of the Exchequer, Rishi Sunak, made the announcement late yesterday, no doubt in an attempt to calm small businesses’ nerves and shorten his budget speech to the House of Commons next month.
He has also been facing pressure from the Opposition and UK businesses do more to ensure the end of furlough, currently scheduled for late April, is less impactful on people.
The government also announced yesterday plans to administer the first jab to all those aged over 50 by May. However, with tougher quarantine measures announced, such as now needing two negative tests on arrival into the UK, there does not seem to be a return to normal life anytime soon, despite the progress on vaccination.
Over in the US, Joe Biden declared he would push through his $1.9trillion stimulus plan with or without Republican support.
Biden said he will not choose between “getting help to Americans who are hurting” or “getting bogged down in a lengthy negotiation or compromising on a bill”. He added: “What Republicans have proposed is either to do nothing or not enough.”
WHAT ARE COMPANIES SAYING?
BHP Group Plc
The world-leading resources company has become the most valuable company in the FTSE 100 for the first time after rebounding strongly from the pandemic. Its market capitalisation stands at almost £115 billion, ahead of Unilever on nearly £107 billion. BHP overtook the consumer goods powerhouse to take the top spot last month, data from Refinitiv shows. The Anglo-Australian miner has been buoyed by rises in the prices of iron ore and copper, its biggest commodities. Its shares have more than doubled in value since their recent nadir on March 12 last year, when markets crashed as the pandemic took hold, and are up about 18 per cent from a year ago.
The French multinational pharmaceutical company pledged yesterday to expand the cost savings plan at the centre of chief executive Paul Hudson’s turnround programme after beating profit expectations for 2020. Strong sales of the French group’s flu shots in the fourth quarter helped offset lower demand for its cardiovascular and diabetes drugs as the spread of coronavirus prompted many to stay away from doctors’ offices and hospitals. It confirmed that it aims to get a Covid-19 shot to market by the fourth quarter “We continue to work in parallel on our two Covid-19 vaccine candidates, with clinical Covid trials starting in the coming weeks,” the company said.
IN THE NEWS
Genomics is secret weapon in the fight against Covid variants – The Times
Sunak to let 1.4m UK businesses spread Covid loan payments over longer period – Financial Times
Exclusive: Pubs and restaurants could reopen in April – with no alcohol – The Daily Telegraph