FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain, March 17, 2020. Matt Dunham/Pool via REUTERS
(Reuters) – British Finance Minister Rishi Sunak has authorised a bailout plan to rescue companies that are seen as strategically important, with the state expected to buy stakes in crucial businesses that are facing acute financial problems, the Financial Times newspaper reported on.ft.com/3eeNJSN.
Under the plan, which is named ‘Project Birch’, the finance minister has raised the UK Treasury’s capacity to handle bespoke bailouts of “viable companies which have exhausted all options”, including government loan schemes, the newspaper reported.
The Treasury told the newspaper it will try to save those companies whose failure will “disproportionately harm the economy”.
Companies from the steel, aviation and aerospace sectors are among those facing acute problems and the offer of the Treasury will apply across all sectors of the economy, according to the newspaper.
Sunak’s allies cited by FT said the Treasury will not initially look at taking equity stakes in companies that are struggling, with the preferred option being extension of loans.
However, the Treasury told the newspaper that it may consider support on a “last resort basis” in “exceptional circumstances.
“In exceptional circumstances, where a viable company has exhausted all options and its failure would disproportionately harm the economy, we may consider support on a ‘last resort’ basis”, the Treasury said in a statement quoted by FT.
It did not immediately respond to a Reuters request for comment late on Sunday.
Reporting by Kanishka Singh in Bengaluru; editing by Diane Craft