Chancellor of the Exchequer Rishi Sunak delivered the annual budget today in a speech at the House of Commons. Sunak only recently stepped into the key government role this past February, inheriting an exceptionally challenging task in a world where the Coronavirus, or Covid-19, has been declared a global pandemic. The budget was delivered following the news that the Bank of England had cut interest rates by 50 basis points to help spur demand.
As part of the budget, Sunak announced a £12 billion plan to respond to the economic impact of the illness. To quote the Chancellor:
“First, whatever extra resources our NHS needs to cope with coronavirus – it will get. So, whether its research for a vaccine, recruiting thousands of returning staff, or supporting our brilliant Doctors and Nurses…whether its millions of pounds or billions of pounds… whatever it needs, whatever it costs, we stand behind our NHS. Second, during this immediate crisis, if people fall ill or can’t work, we’ll support their finances. We’ll make sure that our safety net remains strong enough to fall back on.”
Additional programs including a £500 million hardship fund and statutory sick pay will support an expectation that 20% of the workforce may not be able to work at a given time.
A temporary “Coronavirus Business Interruption Loan Scheme” is part of the budget where banks may offer loans of up to £1.2 million to support SMEs. Risk of loss will be mitigated by 80% so banks can lend with confidence.
In total, the Chancellor committed to £30 billion in fiscal stimulus to support the UK economy. This includes £130m of new funding to extend Start-up Loans and another £200 million for the British Business Bank to invest in scale-ups.
Various tax cuts were on the docket. The Corporation Tax rate will not be cut this year, but will remain at 19% but remains the lowest rate in the G20.
Digging deeper into the actual text of the budget beyond the presentation, and Fintech holds a prominent spot.
The UK government has announced a review of the Fintech sector led by Ron Kalifa OBE. The goal is to support growth and competitiveness in this key sector of industry. Kalifa is an Executive Board Director of Worldpay and was previously CEO of the firm for 10 years. He is also a non-Executive Director of UK Finance.
According to the budget, this review will:
“identify what more industry and government can do to support growth and competitiveness, to ensure that the UK maintains its global leadership in this vital sector. The government will also extend funding for the Fintech Delivery Panel, as well as touring the regions and nations of the UK to showcase its diverse range of fintech firms.”
The budget also mentioned the prospect of a central bank digital currency (CBDC) stating it looks forward to the forthcoming publication from the Bank of England on a possible CBDC:
“The UK will continue to take a leading role in exploring digital currencies, and the wide-ranging opportunities and challenges they could bring.”
Regarding digital assets, or crypto-assets, in general, the budget stated:
“To protect consumers and support innovation in cryptoassets, the government intends to consult on a measure to bring certain cryptoassets into scope of financial promotions regulation. The government also intends to consult later in 2020 on the broader regulatory approach to cryptoassets, including new challenges from so-called ‘stablecoins’.”
The Budget 2020: Delivering on our promises to the British people is embedded below.