June 26, 2020 / 10:23 AM / in 7 days

UK's Sunak sets 'extraordinarily high' bar for company bailouts

FILE PHOTO: Chancellor of the Exchequer Rishi Sunak leaves Downing Street, following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 4, 2020. REUTERS/John Sibley

LONDON (Reuters) - British finance minister Rishi Sunak said he would set an “extraordinarily high” for bailing out individual companies that are struggling as a result of the coronavirus crisis, Bloomberg Television reported on Friday.

Britain’s government has underwritten around 40 billion pounds ($50 billion) in loans to businesses, and given 11 billion pounds in support for wages, but Sunak said he would be very reluctant to offer more.

“The bar for companies accessing taxpayers’ support in a bespoke and significant way is extraordinarily high and should be extremely rare,” he said, adding that any such support would come with “significant strings attached”.

“If we are in a situation like that, we would obviously expect financial investors and creditors to significantly share in the burden,” Sunak added in the television interview.

Britain is steadily lifting coronavirus restrictions after a lockdown at the end of March that led to a 20% collapse in economic output. Non-essential shops reopened on June 15, and pubs and restaurants will resume business on July 4.

Prime Minister Boris Johnson is expected to give a speech on the economy next week.

However, both the Bank of England and government budget forecasters have warned of the potential for unemployment to surge as the government phases out temporary support measures later this year.

“There are very tragic projections for what might happen to employment,” Sunak said.

Preserving every job would be impossible, but the government would do its best to help people find new jobs, he added.

Reporting by David Milliken; Editing by Guy Faulconbridge

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