Two weeks ago I said we would need mass disaster insurance style cash flow support for businesses. I'm pretty sure this where we're now heading
Governments need to send the signal now that businesses do not need to lay people off as a result of this disruption - decisions are being made right now in businesses around the world
Working out exactly how to do this will be difficult and will require setting aside a lot of normal controls on how public money is spent. Will need to be delivered through banks
But credit and loans can't be the only answer for most medium and small businesses - owners will not want to carry that kind of debt and will take decisions to downsize
This needs to be cash grants to cover fixed costs
This needs to be cash grants to cover fixed costs
It will be expensive but better to err on the side of over doing it. Markets will support credible plans to protect economies from long term damage, and central banks will be buying govt bonds in large size soon
Plus even if this takes a year these are one off costs - not permanent commitments that will be difficult to reduce
And this will have to be supplemented with large scale insurance style payments for the self employed and those not in regular employment, again to cover fixed costs like rent, over and above the usual benefit system
E.g. people won't have the time or ability to move to cheaper accommodation
All of this may well come to 10% of GDP or even much more than that. But that is manageable as a one off impact and better than the alternative
Actually I think 10% of GDP is going to be too little - could need to be twice that
I agree with Charlie
Some very welcome and rapid steps from Rishi Sunak today - very reassuring to see that the Government gets it
Hearing already that people didn't hear enough on payroll costs - I think this part of his speech is key:
"I will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and incomes through this period."
"I will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and incomes through this period."
ie today's package will be followed by more
This is crucial to avoid people being laid off over the weeks ahead
This is crucial to avoid people being laid off over the weeks ahead
