£4bn government loans keep firms afloat in crisis

MORE than £4 billion of Government cash has been handed to firms in the West Midlands to help support the region’s recovery from coronavirus.

New Treasury figures show that, as of August 2, more than 87,000 businesses in the West Midlands received £3.3 billion in governmentsupported loan schemes – such as the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) – as part of Government efforts to help businesses bounce back from the pandemic.

At the same time, more than 92,000 businesses were given £1 billion in grants and under a third of employees (31.8 per cent) in the West Midlands benefited from the furlough scheme. Unsurprisingly, the sectors which benefited most from the support were retail, construction and hospitality – including hotels and restaurants. The support has helped a range of businesses across the West Midlands including Home Farm Attingham, a family-run dairy farm in Atcham, Shropshire. The business received a £50,000 Bounce Back Loan from Barclays to cover expenditure in preparation for winter operations and to keep the enterprise running through the lockdown period, allowing it to mitigate the impact of losing a significant amount of tourism traffic through its tearooms.

The Shortbread Company in Birmingham was also among the loan recipients in the West Midlands. Company founder Diana Read said: “Applying for a Bounce Back Loan was a quick and simple process taking less than 10 minutes, and funds were in my account within 48 hours. The loan will allow us to scale the company’s online store, purchase materials and equipment, and hire a relevant team to help with various aspects of the business, for example, marketing. Without the support of a loan, growing the company would have been a long and tedious process and perhaps never growing to where we want to be.”

This week Office of National Statistics revealed the UK economy shrank by a record-breaking 20.4 per cent between April and June of this year and the UK had entered a formal recession, the first since 2009.

The services sector, particularly consumer-facing industries and construction sectors, were the hardest hit, with output in services shrinking by 19.9 per cent, production output falling by 16.9 per cent and construction contracting by 35 per cent. However, GDP did start to recover again in June, up by 8.7 per cent, as lockdown measures across the country were eased.

Henrietta Brealey, director of policy and strategic relationships at Greater Birmingham Chambers of Commerce (GBCC), said that the figures reflected the “scale of the shock” to the economy that the virus crisis has caused.

She said: “Our Quarterly Business Report for Q2 2020 showed businesses were experiencing the worst economic conditions on record within the 30 year lifespan of the survey. The GDP results reflect the scale of the shock to the economy caused by the Covid-19 pandemic and lockdown measures.

“There was some welcome news in these results – June’s figures saw a rally as pent up demand was released following easing of lockdown measures. The challenge now is how to boost confidence and demand to in turn stem the flow of jobs losses and rebuild the economy stronger than ever.

“The UK is reporting the biggest decrease in GDP of all EU nations that have released their data and the USA. The Government must take fast action to ensure that we’re top of the table on recovery – particularly as we approach end of the Brexit transition period.”