£20billion anticipated write offs...

[Lisa Thomas]

read about it here:

Treasury's £4.3bn fraud write-off likely to be eclipsed by £20bn Covid loan defaults as CBILs and BBLs are not repaid

The £4.3bn of Covid loans that may have to be written-off by The Treasury could be eclipsed by businesses failing to repay their CBILs and BBLs loans.

www.cityam.com

 

[WaveJumper]

Grimm reading

 

[ChrisCallaghan]

Very grim reading.... but also not unexpected sadly.

 

[Mark T Jones]

Completely predictable.

 

[Mr D]

Unfortunately no one could have guessed what would happen when the loans were initially given.
I know a number of business owners who grasped eagerly at the straw on offer. And ran out of money a few months later without a return to normality.

For a lot of what were viable businesses in 2019 there may well be a lot of shutting of business still to come.
Town / city centre support businesses for example.

 

[Adam93]

I fear there will be many that choose not to repay the loans rather than not being able to afford to.

 

[IanSuth]

i think my rough sums say this £20bn going into the economy not to be repayed is about 1% of the GDP growth of 7.5% announced this am

 

[Spongebob]

Inevitably what will have happened in a lot of cases is that companies will have used the BBL to service or pay down pre-existing debt from suppliers, landlords etc. This would have seemed an entirely reasonable course of action and important to maintain lines of supply.

Unfortunately the pandemic went on for far longer than most people envisaged in the early days and in very many cases business has not yet returned to profitable levels.

The BBL was intended to provide liquidity but in many cases the money has long gone keeping the company going. The market has bounced back in many sectors but for the unfortunate ones insolvency inevitably beckons.

To take a more macro view however, the government pumping money into an ailing economy is a time honoured and effective strategy. That money hasn't disappeared - it is still circulating through the economy exactly as intended and desired. The BBL scheme was simply a means to distribute money created through quantitative easing. If it helped businesses to survive on its journey to the corners of the economy all to the good.

If companies fail without repaying the loans, the money is still circulating - fulfilling the primary goal of the whole exercise.

 

[Spongebob]

While we're touching on economic theory;

The massive debt incurred by the government through quantitative easing is owed to whom?

The answer of course, is the Bank of England! They created (printed) money on our behalf and "lent" it to the government. Every central bank in the world did exactly the same.



When a government pays back that money to their own central bank, what does the bank do with it?

The answer of course, is that they destroy it in order to preserve the integrity of their currency!


Do you suppose for one minute that every government in the world will burden themselves for the next 50 years paying down their debt to their own central bank, only to see that money vanish?

Or do you think an imaginative solution might be found?

 

[ChrisCallaghan]

That money hasn't disappeared - it is still circulating through the economy exactly as intended and desired.

Not all of it....

Newport bankrupt abused covid loan to fund drug habit

£50,000 Bounce Back Loan was to grow vehicle recovery business, but new tow truck was then sold to buy more drugs.

www.gov.uk

 

[japancool]

Not all of it....

Newport bankrupt abused covid loan to fund drug habit

£50,000 Bounce Back Loan was to grow vehicle recovery business, but new tow truck was then sold to buy more drugs.

www.gov.uk

The drug dealers might be reinvesting their proceeds in buying good British drugs, rather than all that foreign rubbish.