The UK Government shut down our hospitality industry overnight on 20th March. The impact was immediate as were the consequences, zero income.
Just as PPE is clearly not getting to front lines of the NHS, or care homes in sufficient volumes at sufficient speed, precisely the same shortage in volume and lack of speed is also the case for financial support to UK hospitality businesses.
In the past few days we have seen the media as well as political parties and trade bodies rightly call the Government to account on PPE.
Every day since 20th March hospitality businesses have collapsed unable to adjust to the impact from the Covid-19 pandemic. More will do so today, and every day until the financial assistance needed arrives.
Banks are the hurdle that most UK businesses are failing to clear as they maintain post crisis lending criteria despite Rishi Sunak’s requests for emergency reactions to an emergency situation.
The Government like us all is dealing with, to use the totally overused phrase, unprecedented times, and like us all are trying to do their best. But truly extraordinary times also call for truly extraordinary actions.
Banks all over the world are struggling to deal with the Covid-19 pandemic and UK banks are no different. But while they struggle UK banks are causing the UK Government’s financial guidance measures to look toothless.
What UK Government and UK banks should do right now is look to the world’s home of banking for the solution, Switzerland, where extraordinary actions have taken place already.
The Swiss Government working with their banks on 25th March announced a $20 billion emergency loans package. One week later $15 billion in loans had been agreed and were in the bank accounts of 76,035 Swiss businesses.
Two weeks after the UK Government’s loan scheme was launched 983 loans had been approved for £0.9 billion.
- So, the Swiss Government and banks have lent to 75,050 more business than their UK counterparts, or 98.7% more businesses.
- And allowing for today’s $ to £ conversion rate the Swiss Government and banks have lent £12,150,000,000 more money to business than their UK counterparts, or 93.1% more money.
The Swiss loan process is a simple one page document that once submitted takes 30 minutes for funds to arrive in the applicants bank account.
It is not only the UK that could take a lesson in effective banking from Switzerland, the EU is reporting that Germany, France and others are similar to the UK, in doing too little too late. An EU spokesperson last night said: “The backbone of all these economies (European) are SMEs and they need money now. I don’t think politicians are aware of the magnitude of this. Switzerland had shown us all what to do and to do it now.”
As the calls for action get louder, and businesses die daily, all the UK Government has to do is look to Switzerland for guidance, and that can be started by reading the Financial Times today, here’s a link.