British Airways, Marks & Spencer and even Premier League soccer club Tottenham Hotspur are among 53 big companies to take advantage of a special coronavirus loan scheme from the Bank of England to tide them over during the pandemic
By
PAN PYLAS Associated Press
June 4, 2020, 4:13 PM
3 min read
LONDON -- British Airways, Marks & Spencer and even Premier League soccer club Tottenham Hotspur are among 53 big companies to take advantage of a special coronavirus loan scheme from the Bank of England to tide them over during the pandemic.
The central bank revealed Thursday for the first time the list of companies that have taken up its COVID Corporate Financing Facility, a scheme designed for big companies with sizeable operations in the U.K.
The biggest single loan of 1 billion pounds ($1.25 billion) went to German chemical company BASF. British Airways, via its parent group International Airlines Group, borrowed 300 million pounds, while Marks & Spencer borrowed 260 million pounds. Tottenham has borrowed 175 million pounds.
The facility is one of many measures that the central bank and the Treasury have put in place to assist businesses through the disruption caused by the outbreak and the lockdown. Under the scheme, the bank buys the short term debt of firms that are assessed to make a “material contribution” to the U.K. economy.
Many of the companies that took up the facility are in sectors that have seen business come to a virtual standstill.
Chief among these is the airlines sector, which has laid off thousands of staff as planes are grounded. Alongside British Airways, easyJet, Ryanair and Wizz Air have borrowed hundreds of millions of pounds.
Train and bus operators, such as National Express and Stagecoach, have used the scheme. Even the National Trust, which looks after the nation’s natural and historic sites, borrowed 30 million pounds.
Car manufacturers, including Honda, Nissan and Toyota, have also borrowed 1 billion pounds collectively.
The auto sector's problems were thrown in sharp relief Thursday with the news that Aston Martin, which is famous for making James Bond’s car of choice, plans to cut up to 500 jobs. Car dealership Lookers plans to shed another 1,500 jobs
The Society of Motor Manufacturers and Traders said Thursday that new car sales were down 89% in May from the year before, and were at their lowest level for the month since 1952. The overall market is now down 51.4% in the first five months of 2020, with showrooms allowed to reopen only on June 1.
“Restarting this market is a crucial first step in driving the recovery of Britain’s critical car manufacturers and supply chain, and to supporting the wider economy,” said SMMT Chief Executive Mike Hawes.
Companies have largely held off from cutting jobs during the lockdown as a result of the Job Retention Scheme, under which the government pays up to 80% of the salaries of workers retained, up to 2,500 pounds ($3,125) a month.
Treasury chief Rishi Sunak said last week that from August, firms will have to start making contributions to the salaries of workers that are retained but not working, and that the scheme will close two months later.
That’s raised concerns that Britain will see a spike in unemployment then. In total, 8.7 million jobs have been furloughed under the scheme at a cost of 17.5 billion pounds. Even if 10% of those lose their jobs, it would increase unemployment substantially. In March, there were an estimated 1.35 million people unemployed.
