LONDON (Reuters) - Britain’s government provided more support to businesses hit by the coronavirus crisis, saying it would guarantee up to 10 billion pounds ($12.5 billion) in trade credit insurance schemes which protect businesses against defaults or payment delays.
Trade credit insurers had started limiting the cover they provided to businesses in sectors hit hard by the coronavirus pandemic, because of fears of insolvencies, industry sources said.
The state guarantees meant the vast majority of coverage would be maintained, the government said in a statement on Thursday.
They were available on a temporary basis for nine months, backdated to April 1.
Business minister Alok Sharma said the announcement would allow businesses to continue to trade and maintain liquidity in their supply chains.
“This reinsurance scheme is an important step as we carefully set about firing up our economy as we emerge from the pandemic,” he said.
Several countries including France, Germany and the Netherlands have introduced similar schemes, and Britain has also expanded its export credit guarantee scheme, which typically supports trade in developing markets, to cover developed markets.
Business groups welcomed the announcement.
“To help the economy get up and running again, maintaining confidence in supply chains is crucial, and we are encouraged to see this come as the product of collaboration between government and industry,” Allie Renison, head of trade policy at the Institute of Directors, said.
“This will help our customers through this difficult period,” said Milo Bogaerts, chief executive of trade credit insurer Euler Hermes UK.
Trade credit insurance underwrites an estimated 350 billion pounds of economic activity of more than 630,000 businesses in Britain each year, the government said in its statement.
The support follows “weeks of intensive discussions” between insurers and the government, trade credit insurer Atradius said.
($1 = 0.7974 pounds)
Writing by William Schomberg; Editing by Toby Chopra