EconomyFeb 27, 2021 05:40PM ET
© Reuters. FILE PHOTO: People shop at a market stalls, amid the coronavirus disease (covid-19) outbreak, in east London
LONDON (Reuters) – British finance minister Rishi Sunak will announce 5 billion pounds ($7 billion) of additional grants to help businesses hit hard by pandemic lockdowns in his budget statement next week, the government said on Saturday.
Shops, bars, clubs, hotels, restaurants, gyms and hair salons would be among nearly 700,000 companies eligible for new direct cash grants of up 18,000 pounds.
The government said the funding takes the total spent on direct grants to businesses during the crisis to 25 billion pounds.
Encouraged by the rapid roll-out of vaccines, British Prime Minister Boris Johnson has unveiled a route out of lockdown for England. However, some businesses will need to remain shuttered until the summer.
“There’s now light at the end of the tunnel and this 5 billion pounds of extra cash grants will ensure our high streets can open their doors with optimism,” said Sunak.
Local authorities in England will also get an extra 425 million pounds to distribute grants to businesses not eligible for the restart grants, while the devolved administrations in Scotland, Wales and Northern Ireland will receive 794 million pounds of extra funding.
The government has already racked up more than 280 billion pounds in coronavirus spending and tax cuts, pushing Britain’s borrowing to its highest level since World War Two.
While Sunak’s March 3 budget will include more spending to prop up the economy during what he hopes will be the last phase of lockdown, he will also probably signal tax rises ahead to plug the huge hole in the public finances.
In an interview with the Financial Times, Sunak said he would use the budget to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support.
Earlier on Saturday the government said Sunak is also expected to announce an initial 12 billion pounds of capital and 10 billion pounds of guarantees for the new UK Infrastructure Bank.
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