Britain’s government has risked creating a legion of ‘zombie’ companies by encouraging banks to lend 45 billion pounds ($62 billion) to small businesses with a 100% state guarantee during the COVID pandemic, a leading think tank warned on Wednesday, Reuters reported. The Resolution Foundation said most of the support given by the government to businesses and workers was useful and more would be needed when finance minister Rishi Sunak sets out his 2020/21 budget on March 3.
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Businesses say they’re barely coping with the current pared-down regime of Brexit checks on goods shipments to Northern Ireland and want to delay fuller checks due to kick in on April 1, Politico reported. Executives from ports, haulage, logistics and customs clearance firms issued their plea on the eve of Thursday’s meeting between European Commission Vice President Maroš Šefčovič and U.K. Cabinet Office Minister Michael Gove in London.
Italian chain Prezzo will permanently close 22 restaurants after being bought out of pre-pack administration by private equity firm Cain International, CityAM.com reported. As a result of the deal, 22 of the high street stalwart’s 178 restaurants will not reopen. Cain said that 216 of its 2,900 jobs would be lost. The deal came after Prezzo was forced to go into administration after failing to reach agreement with landlords on rent payments.
For years, landlords have had the upper hand in London’s real estate market, pushing up rents as businesses clamored for prime locations near offices, tourism hot spots and transport hubs and as the city’s population grew and grew. Restaurants were often locked into leases with clauses that allowed the rent to only go up. Retailers faced increasingly exorbitant rents. Over the course of a year, the pandemic has brought a halt to this arrangement, shifting the power balance between commercial property tenants and landlords, the New York Times reported.
Bespoke Hotels Group has defended its decision to resort to beginning insolvency proceedings for four of its hotels, Boutique Hotelier reported. Staff at The Lyndene and St Chads in Blackpool, The Townhouse in Manchester and The Duke in Plymouth were notified on Wednesday that they had all been made redundant. Bespoke Hotels said that the appointment of an insolvency practitioner was a last resort, after months of looking for alternative financial solutions.
The Bank of England has told British banks that they should take whatever steps are necessary to prepare their systems for negative interest rates, opening up a pathway for the central bank to use this additional policy tool to encourage more lending, the New York Times reported. But policymakers cautioned on Thursday that they were not trying to send the signal that rates would be cut to zero or lower imminently. The markets responded accordingly: The British pound and bond yields rose as traders pared back expectations for a future rate cut.
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Two British brothers are on the cusp of tying up the financing for their takeover of grocer Asda, the U.K.’s largest leveraged buyout in more than a decade, Bloomberg News reported. In a deal that could shake up Britain’s highly competitive grocery market, Zuber and Mohsin Issa and TDR Capital will pay less than a billion pounds of their own money to gain control of Asda in a transaction valuing the country’s third-largest grocer at 6.8 billion pounds ($9.2 billion). The Issas and TDR struck a deal with Walmart Inc. to take control of Asda in October, with the U.S.
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British businesses ravaged by the pandemic skipped more than 4 billion pounds ($5.5 billion) in rent last year. With the bill coming due, a battle over sharing the pain is heating up, Bloomberg News reported. Landlords, acknowledging the damage wrought by almost a year of enforced closures and depleted foot traffic, are demanding lenders bear some burden as about one-fifth of commercial rent is behind. Regulators are urging banks to avoid taking a hard line. Retailers and restaurateurs, hammered by the deepest recession in three centuries, say the pile of debt isn’t their fault.
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The number of U.K. listed companies at risk of insolvency has doubled as restrictions aimed at curbing the spread of the coronavirus continue to ravage the economy, Bloomberg News reported. A record 35% of U.K. companies issued profit warnings last year, according to a report by the consulting firm EY. There was also a surge in the number of companies issuing three or more profit warnings in a 12-month period, a warning sign for insolvency. “Many U.K.
The number of personal insolvencies recorded in England and Wales fell to a three-year low in 2020, the Evening Express reported. The Insolvency Service said that there were 111,424 individual insolvencies in 2020 – a total which was down by 9% on 2019. It marked the lowest annual figure since 98,897 personal insolvencies were recorded in 2017. The service said the fall in cases was driven by low volumes of bankruptcies and debt relief orders (DROs), which both decreased by 25% from the previous year.