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UK Government Could Step In to Save Important Companies

It has been revealed that the Treasury may step in to save the nation’s most important companies from financial disaster. This news comes as more UK businesses get set to open again following the lengthy lockdown.

More About the Plan

This plan has been given the name Project Birch. State funds will be used to save vital firms that are struggling due to the lockdown crisis. The key phrase is that failure of the company would need to “disproportionately harm the economy” in order for officials to step in and save them.

Among the industries this could involve are steel, car-making and aviation. The growing number of companies struggling to get by has already lead to an increased number of them using the debt collection process.

Chancellor Rishi Sunak has moved to ensure that the Government can help out companies that remain viable but that have exhausted all of their other options. It would be available in any sector of the economy.

Sunak is said to have already privately told aviation companies in the UK that he is willing to be a lender of last resort for them. It has also been reported that Jaguar Land Rover, Virgin Atlantic and Loganair are all in discussions with the Government about their respective futures.

It is not thought that the Treasury would look to take equity in any of the companies that need bailing out. Instead, they would provide a loan over an extended period, with the Government becoming a preferred creditor if the firm goes under.

There is also the possibility that loans could be converted to equity at a later stage in some cases, though. It has been estimated by trade group TheCityUK that taxpayer-funded loans could reach over £100 billion, after passing £40 billion in the first couple of months of bailouts.

More Businesses Set to Re-Open

The next stage of the country getting back to work after the lockdown will begin on 1 June. This is when outdoor retail can begin again for car showrooms and outdoor markets in England.

On 15 June, more businesses will join in. From this date, department stores, shopping centres and High Street shops selling books, toys, clothes and so on can open again. However, they will need to meet the social distancing and hygiene standards that have been published.

Shop owners will need to provide hand sanitiser and clean the stores each night. Shoppers won’t be able to try on clothes or test makeup. In addition, posters will need to go up in store windows, letting everyone know the rules in place.

In terms of returned items, shops should hold onto them for 72 hours before putting them back up for sale again.

Prime Minister Boris Johnson has pointed out that authorities will be able to close any business that doesn’t meet the new safety requirements. He said that he wants the public to feel confident about being able to shop safely wherever they go.

Among the businesses that aren’t yet covered in the new rules are those where the risk of coronavirus transmission is higher. These are the likes of beauty salons, cafes, nail bars and pubs.