CBI boss: Government must offer more business support before March budget
The head of the CBI business lobby group, Tony Danker, says the government cannot wait until the March budget to roll out extra support for businesses impacted by fresh Covid restrictions:
We’ve seen lockdowns before, we know the impact they have, and so I’m afraid more comprehensive restrictions do require a more comprehensive economic response.
Speaking to the BBC’s Today programme, Danker said there were three urgent issues that the government needed to address in its emergency response for businesses.
The first is restricted cash flow, which could be helped with further VAT deferrals, tax relief, and more generous government grants.
The second is probably plugging the gaps that are now further exposed again learning lessons from last year. The thing we learnt, most of all, in terms of gaps was probably the role of supply chains. You close hospitality, you also have a big knock on effect on food and drink manufacturers. You close airports and aviation, and tens of thousands of of people in the supply chain [are] affected.
And I think the third thing is underwriting support for the duration, so that firms stay the course rather than acting precipitously.
I don’t think we can wait until the budget in March to review support. Business will take a view sooner, and so I think we need to respond very soon, and not wait for the budget.
Introduction: England, Scotland plunged into fresh lockdowns
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Monday’s market rally, which lifted major European indexes and sent the FTSE 100 up nearly 3% in the first trading session of 2021, has been cut short.
A surge in Covid cases and concerns that health services could be overwhelmed have prompted fresh national lockdown measures in Scotland and England. While England’s measures will become legally binding on Wednesday, the prime minister Boris Johnson has asked people to start following the restrictions from Tuesday night onwards.
It means most businesses will close their doors, including all non-essential retailers, hair and nail salons, gyms and leisure centres. Pubs will also no longer be allowed to offer takeaway alcohol.
UK business lobby groups are now calling for more government support, including further tax relief, VAT deferral, cash grants and an extension of the low-interest bounce back loan programme for small businesses.
Cabinet Office minister Michael Gove said this morning that the government will review the restrictions on 15 February, with hopes of progressively lifting restrictions after that.
In the meantime, futures for major European indexes including the FTSE 100 are pointing to a negative start for equity markets on Tuesday morning:
US equities also tumbled overnight amid concerns over a surge in Covid cases and uncertainty over the outcome of a dual senate race in Georgia that will determine whether Republicans or Democrats control the upper house. The S&P 500 plunged nearly 1.5% while the Dow fell 1.2%. The Nasdaq also dropped 1.5%.
Asian trading has been mixed, with China’s Shanghai Composite up 0.7%, Hong Kong’s Heng Seng up 0.6% and Japan’s Nikkei down 0.3%.
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