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Industry News

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1. BoE pumps an extra £100bn into the economy

The Bank of England (BoE) has announced a new stimulus package for the economy to mitigate against the impact of the coronavirus crisis and lift inflation from the current 0.5% and closer to the 2% target. The Bank confirmed a fresh £100 billion in quantitative easing, with this following a £200 billion boost announced in March. This £100 billion takes the BoE’s asset-purchasing programme to £745 billion, a figure equivalent to around a third of GDP.

2. FCA extends payment holiday

The Financial Conduct Authority (FCA) has told banks and credit providers to extend payment holidays on overdrafts, loans and credit cards until October as people continue to feel the financial impact of the COVID-19 pandemic. While a policy that allows those whose income has been hit by the lockdown to defer payments was expected to be wound up at the end of July, the watchdog has proposed an extension of the support window.

3. 1,067,340 businesses take out government-backed loans

The lending sector has supported more than one million businesses through the three main government-backed lending schemes in just over three months, figures published by HM Treasury have revealed. 1,067,340 facilities worth £45 billion have so far been approved through the CBIL, BBL, and CLBIL schemes. This includes 1,013,410 Bounce Back Loans worth £30.93 billion, 53,536 loans worth over £11 billion through the Coronavirus Business Interruption Loan Scheme and £2.58 billion through the Coronavirus Large Business Interruption Loan Scheme.

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4. UK debt worth more than the economy

The UK borrowed £55.2 billion in May, nine times more than in May 2019. May’s borrowing took total government debt to £1.95 trillion – or 100.9% of GDP, with national debt now worth more than the economy for the first time since 1963. While government spending included funding for support measures rolled out amid the coronavirus crisis, income from tax, National Insurance and VAT fell, with HMRC data showing tax payments were down £16.2 billion – or 43% – on the same period last year.

5. Specialist lenders call for parity with big banks

Non-bank lenders met with Treasury officials as they lobby for access to ultra-cheap funding from the Bank of England and the same loan guarantees provided to big banks. Stephen Haddrill, director general of the Finance & Leasing Association (FLA), warned: “Non-banks are stretched between providing forbearance, satisfying the people they get their funding from, and trying to satisfy demand for new lending.”

6. Risks to non-bank financial sector to be probed

The Bank of England governor, Andrew Bailey, has told the Chancellor that shadow banks could face tougher regulation after calling on central bank assistance during the peak of the market panic in March. “Where appropriate, the assessment will identify gaps in resilience in the non-bank financial sector and the potential measures that may be taken to increase resilience,” Mr Bailey wrote in a letter to Rishi Sunak.

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7. Commercial landlords left out of pocket

Commercial landlords received just 18.2% of the rental payments they were owed in late-June, the quarterly rent collection date. The collection rate was lower than the 24.3% collected on the March quarterly rent day, according to Re-Leased. The cloud-based commercial property management platform worked out the figures based on more than 10,000 commercial properties and 35,000 leases on its UK platform.

8. Funding applications from female entrepreneurs halve

Figures have shown the number of applications from women to Virgin StartUp, which provides funding for entrepreneurs, has halved since the start of the coronavirus lockdown, while for men applications were down just 17.5%. Dame Jayne-Anne Gadhia, the former boss of Virgin Money, said that there should be a tax incentive for ‘relevant City firms’ to set up funds especially for female innovation as the ‘old boys network is alive and kicking’.

9. Business Secretary announces new takeover laws

Alok Sharma, the business secretary, has shared how the law will be changed to allow the government to intervene more easily in takeovers of UK companies if the acquisition is deemed to impact the UK’s ability to combat public health emergencies. Mr Sharma calls for a new law to lower the threshold for intervention on turnover and share of supply; these three areas will give government the oversight it needs.

10. Think-tank suggests share plan to support SMEs

A report for the Social Market Foundation, by MP Bim Afolami, suggests that the government should invest £15 billion in SMEs in exchange for shares that would one day be sold to the public. The Unlocking Britain report proposes that the Recovery Fund would be floated on the London Stock Exchange. Mr Afolami, who is expected to raise the idea in Parliament, says the £15 billion could be borrowed and invested via the government's British Business Bank.

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11. Economists warn of day of reckoning

Paul Johnson, director of the Institute for Fiscal Studies (IFS), has warned of likely tax rises because of a coming recession. He said getting the UK's £2 trillion debt mountain under control will take decades and is likely to require the Treasury to raise an extra £35 billion to £40 billion a year once the immediate crisis subsides. He added: “The time to pay for this will come, but not this year and not next.”

12. ‘Perfect’ time for brokers to stand out

Matt McCullough, national sales manager of intermediary mortgage distribution at Aldermore, says that now is the ‘perfect time’ for the intermediary market to stand out. He added that one of the things the firm is really campaigning for is for brokers to get closer to their full-time, self-employed landlords, saying as an intermediary they are “…potentially becoming an indirect business partner of a landlord.”