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UK Earmarks $6.2 Billion for Struggling Businesses

Following the start of a third national lockdown to curtail the spread of Covid-19, the U.K. will now provide $6.2 billion in aid to support struggling businesses impacted by the pandemic, including hard-hit high street retail.

U.K. Prime Minister Boris Johnson on Monday announced the lockdown, which is expected to last through at least mid-February. The shutdown has closed nonessential retailers, with the public asked to shelter in place and returned kids to home schooling.

A day later, U.K.’s Finance Minister Rishi Sunak said the government would provide a new aid package totaling 4.6 billion pounds ($6.2 billion). The aid package is intended to help an estimated 600,000 retail, hospitality and leisure firms. Companies applying for grants can seek up to 9,000 pounds ($12,224). The package includes a separate discretionary fund of 594 million pounds ($806.8 million) for anyone impacted by the pandemic, but ineligible to apply for the new grants.

Johnson is expected to get additional pressure from business leaders during a call Wednesday for more assistance. Some retailers have been pushing to renegotiate leases from fixed rent to ones based on a percentage of sales to help ease their Covid pain. Other possibilities are the push for greater small business rate relief on property from their local councils, as well as deferrals on the new value-added taxes, which became effective Jan. 1.

U.K. retailers have been hit by a series of temporary shutdowns even before the most recent national lockdown. Welsh retailers missed out on Boxing Day sales as Wales underwent a lockdown Christmas Eve, along with Northern Ireland and Scotland, while a new strain of Covid-19 led to portions of England joining the shutdown the weekend before Christmas. That lockdown was to last just two weeks, but more locations across England were pushed into Tier 4 restrictions by New Year’s Day, leading to the third national lockdown Monday as virus cases continued to spike across the U.K.

The store closures prompted Primark parent Associated British Foods to raise its estimate of lost sales from the lockdown by $299.9 million, upping the forecast for losses to 650 million pounds ($886.1 million) from an earlier projection on Dec. 4 of losses totaling 430 million pounds ($586.2 million).

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