This article is more than 6 months old

This article is more than 6 months old

The chancellor Rishi Sunak has announced a £350bn package of loans and grants to help Britain cope with the lockdown of large parts of the economy, as he warned the country was facing a threat to its prosperity unmatched in peacetime.

Less than a week after pledging £12bn in his budget to soften the impact of the Covid-19 pandemic, the chancellor admitted that the measures were insufficient to tackle the savage blow to growth and stressed he would do “whatever it takes” to see the UK through the crisis.

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“The coronavirus pandemic is a public health emergency. But it is also an economic emergency. We have never, in peacetime, faced an economic fight like this one. But we are well prepared. We will get through this,” he said.

He was speaking alongside Boris Johnson at the daily Downing Street press conference, 24 hours after “social distancing” measures were announced, which call on the public to stay away from pubs, restaurants and mass events.

The chancellor said the government would provide £330bn of loan guarantees – with more available if needed – to help businesses pay their bills during the crisis and top up the £12bn budget stimulus with a further £20bn of spending.

Sunak said that every business in the hard-hit retail, leisure and hospitality sector would have a year-long holiday from paying business rates, with smaller companies also eligible for a cash grant of up to £25,000.

On a day on which one analyst predicted the economy would shrink by 15% in the second quarter of 2020, the chancellor also announced cash grants of £10,000 for the UK’s 700,000 smallest companies, and a three-month moratorium on mortgage payments for home owners in difficulty as a result of the coronavirus.

The prime minister repeatedly compared the government’s task in confronting Covid-19 to a war effort. “We must act like any wartime government and do whatever it takes to support our economy,” he said. “This enemy can be deadly, but it is also beatable.”

The chancellor made it clear that the extra spending was merely the first phase of the government’s response.

The support needed was “on a scale unimaginable only a few weeks ago”, Sunak said: “This is not a time for ideology and orthodoxy, this is a time to be bold – a time for courage.”

The measures were announced on another day of fast-moving developments in the coronavirus outbreak, as:

• The UK toll rose to 71 after a further 18 people died.

• The prime minister hinted the government is edging closer to closing schools, with many reporting that they are already struggling to stay open, as staff and students stay away.

• Ministers published details of emergency legislation, including the power for police and border officers to detain anyone they believe could spread the virus.

• Sport and cultural events, from Euro 2020 to the Edinburgh science festival were postponed or cancelled.

• The foreign secretary, Dominic Raab, announced that the government is now advising British nationals against any foreign travel, initially for 30 days.

• Sir Patrick Vallance, the government’s chief scientific adviser, told MPs that keeping the total number of Covid-19 deaths under 20,000 would be “a good outcome”.

Job cuts at Gatwick airport and news that the fashion chain Laura Ashley was going into administration provided early evidence of the economic impact of the government’s stringent measures to contain the virus.

Sunak said he was working on separate measures designed to help particularly hard-hit sectors such as airlines and airports, and would also come up with a package to protect jobs and incomes within the next few days.

He said he would discuss with trade unions proposals for an “employment support” scheme that would help persuade firms to keep workers on the payroll.

Sunak’s statement came within an hour of Donald Trump announcing a $1tn plan in the US that could involve both tax holidays and direct cash payments of $1,000 to American citizens. “We are going big,” Trump said at a news conference.

Wall Street traders welcomed the news, with the Dow Jones closing up 5.2%. Sunak’s stimulus came after the London market had closed but the FTSE-100 also closed up 2.8% at 5295 as hopes for stimulus grew.

Earlier, Robert Chote, the head of the Office for Budget Responsibility, the body responsible for the government’s economic forecasting, said the UK faced a “wartime situation” and should not hesitate to borrow more to deal with the disruption caused by the pandemic.

Sunak’s failure to announce immediate measures to directly support workers was criticised by Labour’s John McDonnell. The shadow chancellor said: “The further announcements laid out by the chancellor lack the certainty required amidst growing public anxiety, and still do not go far enough in protecting workers, renters and those who are losing their jobs, or in fully supporting businesses at the scale necessary.

“In particular, the chancellor’s claim that new forms of employment support will be developed does not appreciate the urgency and gravity of the situation. Workers and businesses need to know now that they will be supported, not in a few days’ time.

Sunak told McDonnell in the House of Commons that the housing secretary, Robert Jenrick, would announce measures in the coming days, “to protect renters in these difficult times”.

Labour leadership contender Keir Starmer, writing in the Guardian, attacked the government’s response to the crisis in recent days, warning that “confused messaging and policy-making” has “exacerbated uncertainty and cannot continue”.

He called for the government to publish a “national plan of action” and for Sunak to update MPs regularly on the evolving economic situation and the measures he will take to combat the crisis.

“The chancellor should commit to making regular financial statements, with updated economic forecasts. That way, parliament will be able to subject the government’s approach to effective scrutiny and test what further intervention may be necessary to protect jobs and the economy,” he said.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The chancellor has acted swiftly to back retail businesses dealing with the unprecedented challenges created by coronavirus. He is to be congratulated for listening carefully to the concerns of retailers and has delivered a big, bold package of measures that will be a huge cashflow boost and will improve confidence for those affected.

Frances O’Grady, general secretary of the TUC, said: “The chancellor is right to provide this emergency support for business. But it must be conditional on employers protecting jobs and livelihoods, as is the case in countries like Sweden and Denmark. This can’t be just a bailout for boardrooms – it has to be about putting money in workers’ pockets too.

Sunak was criticised by the Speaker of the House of Commons, Lindsay Hoyle, for announcing his plans to the media, before telling MPs. “Ministers have a duty to report first to this house when major changes of policy are announced,” he said, prompting the chancellor to apologise, before repeating almost word for word the announcement he had already made on live TV.

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The announcements came as No 10 created a new system of ministerial committees devoted to streamlining the government response to the virus. Johnson will still chair regular meetings of the existing Cobra emergencies committee; however, another, coronavirus-specific committee of ministers and senior officials, known as C-19, will meet daily.

Additionally, No 10 has created four implementation committees focusing on health, the economy, preparedness elsewhere in the public sector and on the international response, all of which will feed into C-19.