Rishi Sunak to provide £5bn of grants to pandemic-hit businesses

Chancellor will throw lifeline to British high street in next budget

British Chancellor Rishi Sunak will deliver his budget on March 3. Reuters.

Chancellor Rishi Sunak will in his budget statement next week announce additional grants worth £5 billion ($7bn) to help businesses hit hard by coronavirus lockdowns, 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.

The government said the funding takes the total spent on direct grants to businesses during the coronavirus crisis to £25bn.

Encouraged by the rapid distribution of vaccines, Prime Minister Boris Johnson has unveiled a route out of the pandemic-induced lockdown for England.

However, some businesses will need to remain shut until the summer.

“There is now light at the end of the tunnel and this £5bn of extra cash grants will ensure our high streets can open their doors with optimism,” said the chancellor on Saturday.

Local authorities in England will also receive an extra £425m to distribute grants to businesses not eligible for the restart grants, while the devolved administrations in Scotland, Wales and Northern Ireland will receive £794m in extra funding.

The government has already racked up more than £280bn in coronavirus spending and tax cuts, pushing Britain’s borrowing to its highest level since the Second World War.

While Mr 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, the chancellor said he would use the budget to level with the public over the "enormous strains" in the country's finances, issuing a warning that a bill will have to be paid after further coronavirus support.