Sunak mulling emergency Covid-19 loan scheme extension

Chancellor Rishi Sunak is set to extend the Covid-19 emergency loan scheme in a bid to support businesses amid intensifying cost pressures and severe worker shortages.

Officials at the Treasury are reportedly mulling extending the Recovery Loan Scheme, which is set to end on December 31, according to reports in the Daily Telegraph.

The extended scheme would offer watered down terms to businesses. Under the current programme, the government insures 80 per cent of loans worth between £25,000 and £10m.

Official are allegedly sounding out what guise an extended loan scheme should take with banks and financial institutions.

The government could back a lower proportion of loans made under the extended scheme in order to limit potential losses to taxpayers.

Businesses across the UK are grappling with soaring raw material, logistics and energy costs and are having to hike pay to attract workers. 

Higher cost bases, compounded by shortages of crucial inputs generated by supply chain snarl ups, are restricting production and putting a spanner in the UK’s economic recovery from the Covid-19 crisis.

A Treasury spokesman told the Telegraph: “We have provided over £79bn to 1.6m businesses through our Government-backed Covid loans, including the Recovery Loan Scheme, to ensure firms had finance they needed throughout the pandemic.”