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Big business bailout5/31/2023 ![]() But more importantly, for many of these companies, time is of the essence – they need immediate support if they are to survive. This is partly because such firms are so numerous (there are 5.9 million small and medium-sized businesses in the UK, if defined as companies with less than 250 employees), and there is only limited policy and administrative bandwidth to monitor and enforce conditionality. Right now, it doesn’t make sense to attach strict conditions to support for smaller businesses. Bailouts are on the cards.ĭifferent kinds of businesses pose different bailout challenges and a debate has already begun regarding what form bailouts should take, and what the government should expect in return. Business will need more support, and on more generous financial terms. Even for those businesses lucky enough to receive a loan, major question marks remain over their ability to make repayments in the long term. ![]() This, coupled with the government’s reliance on profit-seeking intermediary banks to distribute loans and the lax regulation of those banks means money is not getting to the firms who most need it. The scheme currently only underwrites 80% of each loan’s value and doesn’t cap interest rates. It is becoming increasingly apparent that the government’s primary crisis support mechanism, the Coronavirus Business Interruption Loan Scheme (CBILS) won’t be enough to prevent a private sector meltdown. Or would it? More importantly, is that what we want? ![]() Once the crisis came to a close we could have flicked the switch back on. They say we should have put the economy on ice and frozen every business’ balance sheet the moment the lockdown began. ![]()
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