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Tiny fraction of UK firms successful in bids for state-backed virus help

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UK chancellor Rishi Sunak. Photo: PA

UK chancellor Rishi Sunak. Photo: PA

PA

UK chancellor Rishi Sunak. Photo: PA

Only a small fraction of British companies have successfully accessed financial help from the government to withstand the economic fallout from the coronavirus outbreak, while many more have failed so far, a survey shows.

The British Chambers of Commerce (BCC) said 1pc of companies had received funds from the government's Coronavirus Business Interruption Loan Scheme, while 8pc said their application had been unsuccessful. Another 7pc received government grants for small businesses, but double that proportion applied unsuccessfully.

Although some of the survey was conducted before the government relaxed rules to allow more businesses to apply for help, the figures make unpromising reading.

Gauges of business activity have already slumped to record-low levels and economists expect Britain's economy will contract by at least 10pc in the second quarter.

"Our latest data shows that many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter," BCC director general Adam Marshall said.

The companies that had so far failed to access government finance cited complexity and slow response times.

The BCC said 16pc of companies had less than a month's worth of cash reserves left, while 6pc had run out entirely.

The cost to government of supporting businesses, especially to keep staff on payroll, is also mounting rapidly.

Under chancellor Rishi Sunak, Britain has pledged over £60bn (€69bn) in public spending and tax cuts in an attempt to shield its economy from a deep recession.

The BCC said 37pc of firms it surveyed intended to put more than three quarters of their staff on leave, up from 32pc a week ago, taking advantage of a government scheme that will pay 80pc of workers' salaries up to a cap of £2,500 a month.

This would cost £30bn to £40bn just for the initial three months that the scheme has been guaranteed for, the Resolution Foundation think-tank has estimated.

Reuters