One-Third of U.K.’s Virus Loans Forecast to be Written Off

More than one-third of the 89 billion pounds ($122 billion) of lending handed out by the U.K. government to help businesses through the pandemic will never be repaid, according to the National Audit Office.

The report, based on government estimates, says 31 billion pounds will need to be written off, highlighting the dire position of many firms and swelling the long-term hit to the public finances caused by the crisis. That amount forms part of the 271 billion pounds the spending watchdog says the government expects to spend in response to the pandemic. As of December, 116 billion pounds had been spent, it estimated.

State-backed loan programs have been a key part of the government’s support package since the virus took hold, allowing firms to access cash to see them through months of severe restrictions and closures. Still, many companies have warned more aid is needed, with one lobby group estimating 250,000 small firms are at risk of going bust.

Government support during the crisis has already seen Chancellor of the Excehquer Rishi Sunak push borrowing to the highest level in British peacetime. Measures as a result of the latest lockdown mean the spending total could now be around 300 billion pounds.

©2021 Bloomberg L.P.

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