“Birch Project”: The Treasury draws up a rescue plan of last resort to save the biggest British companies


UK chief financial officer Rishi Sunak has drawn up a bailout to bail out strategically important companies, which could lead the Treasury to support key industries as a “last resort” once all others have been exhausted. the options.

Under this plan, dubbed the “Birch Project”, Sunak has increased the Treasury’s ability to manage the use of viable companies on a case-by-case basis, the failure of which will “disproportionately harm the economy” if the options include the current government or government loan programs. shareholder support, I have not worked.

“We have put in place unprecedented levels of support to help companies overcome this crisis. Beyond that, many companies are receiving support from established market mechanisms, such as existing shareholders, bank loans and corporate finance, “said a Treasury spokesperson in an emailed statement. .

“In exceptional circumstances, when a viable business has exhausted all options and its failure would disproportionately harm the economy, we can consider support as a” last resort “. As the British public might expect , we are implementing a reasonable emergency plan and any support would be on terms that protect the taxpayer, “the statement added.

Several companies in key sectors such as steel, aviation and the aerospace sector are experiencing serious financial difficulties. Some have already requested state aid to survive the economic consequences of the blockade.

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These include Jaguar Land Rover, which requested a support package more than £ 1 billion ($ 1.2 billion), according to a Sky News report. The luxury automaker owned by Tata Motors of India.
TATAMOTORES
-1.54%
And employing 38,000 people in the UK, sales of its vehicles plummeted by almost 31% in the three months ending March compared to the same period last year.

Virgin Atlantic, 49% owned by Delta Air Lines
DAL
-2.02%,
LoganAir and Tata
500470,
-3.22%
East quarrel with the government what support might be available, according to the Financial Times.

“There is a difference between being contacted for support and accepting it,” said a person close to the Treasury, adding that the Treasury will inform Parliament of the expenses it has incurred following any agreement.

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Government support for businesses includes paying workers wages through vacation, deferral of tax payments, more than £ 22 billion in government supported loans and £ 20.4 billion in funding businesses through the Bank of England.

As of May 19, eight million jobs had been suspended, £ 11.1 billion claimed so far through the Coronavirus Employment Retention Scheme (CJRS), according to government data. The Coronavirus Business Interruption Loan Plan (CBILS) approved 40,564 pounds sterling worth £ 7.25 billion.

Transport Secretary Grant Schapps mentionned “Birch Project” in Parli ament last week with reference to the future of the aviation sector.

“Currently, 43,500 employees are suspended from airlines alone and 2,600 others from airports. I am very aware of the proposed layoffs and layoffs, which is of great concern to us, and that is why we have the supplementary program, the Birch process, with the Treasury. Although I cannot go into the details of individual cases, for reasons of confidentiality, I can assure honor. Sir, this work is underway, ”said Schapps.

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