The coronavirus pandemic has placed enormous stress on businesses of all sizes and across all industries. The government has responded to this crisis with a number of far-reaching stimulus measures such as, business funding packages and financial support for staff. However, as a result of these much needed interventions, many businesses have taken on greater levels of debt than they would have planned for. The result of this debt may compromise the viability and growth of many of those if there are no support mechanisms put into place.
To address this unique challenge, TheCityUK, an industry-led body representing British-based financial and related professional services organisations, has through its Leadership Council, set up a Recapitalisation Group (RCG) alongside key industry policymakers and stakeholders.
The group is chaired by Sir Adrian Montague, TheCityUK Leadership Council Chairman and supported by Ernst Young. Its mission is to understand and identify mechanisms needed to support the recapitalisation of businesses in Britain which have needed to take on additional debt in response to the pandemic.
The RC group’s work will include deliberation on, how the financial services sector might support any recapitalisation, how new or existing public, private, and cross-sector proposals could support businesses, and finally, how to speed-up economic recovery and protect employment.
After having written to Andrew Bailey, the Bank of England Governor in May, TheCityUK shared initial analysis of the RCG on the potential level of unmanageable debt held by businesses across the country in light of the shuttering of much of the economy. The letter also set out an approach to finding solutions led by industry to recapitalise businesses and support recovery.
The RCG published an update yesterday regarding its initial thought on how the private sector can support SMEs in managing unsustainable debt, setting out the scope of the challenge, considering the sectors most likely to need support, exploring how private sector capital could be organised and what gaps could be taken on by the public sector.
The update also discussed crucial challenges for any proposed solutions to make sure they work for business right across Britain. You can read the update here.
The group plans to publish final recommendations in July, while it continues to consult extensively with key stakeholders and policymakers to help develop the most viable solutions and delivery mechanisms.
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