FTSE 100 Futures index stays down despite £350 billion rescue package

UK derivative benchmark index FTSE 100 Futures is down for the second straight day in overnight trading.

As at 5.12am GMT on Wednesday 18 March, Footsie Futures are trading at 5,137.5 – 145.3 points below the previous day’s close.

Read also: FTSE 100 sees early gains eroded amid coronavirus panic

Johnson: UK government will do 'whatever it takes to support the economy'

On Tuesday 17 March, UK Prime Minister Boris Johnson in a daily press conference from Downing Street stated that the coronavirus has become so ‘dangerous and infectious that without drastic measures to check its progress, it would overwhelm any health system in the world’.

For the UK to win the fight against the ‘deadly’ but ‘beatable’ pandemic, he said the government will have to ‘act like any wartime government and do whatever it takes to support our economy’.

£350bn stimulus unveiled, including £330bn in loans

Standing next to Johnson was Chancellor Rishi Sunak, who oversees the country’s economic matters. Sunak echoed the urgency of the situation as he unveiled details of a £350 billion economic stimulus, declaring the pandemic both a public health and economic emergency.

The bailout, equivalent to 15% of the UK’s total Gross Domestic Product, will include £330 billion in loan guarantees to businesses of all sizes, as well as a further £20 billion aid in the form of tax holidays for the hospitality sector and one-time funding grants of between £10,000 and £25,000 to small businesses.

Together with other Budget measures previously announced, direct financial support comes up to an estimated £32 billion.

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On the supply-side measures, Sunak said that ‘any business who needs access to cash to pay their rent, their salaries, suppliers or purchase stock will be able to access a government-backed loan or credit on attractive terms’.

‘And if demand is greater than the initial £330 billion (for loans) I'm making available today, I will go further and provide as much capacity as required. I said whatever it takes, and I meant it,’ he said.

The rescue package was announced as the total number of coronavirus cases in the UK hit 1,950 and deaths numbered at 71. The government’s chief scientific also earlier estimated that about 55,000 residents might have contracted the virus.

Mixed reactions from the industries

Reactions to the stimulus have been mixed.

Johan Lundgren, chief executive of Easyjet, told BBC News that the Chancellor’s measures while a good move, did not address the fact that airlines are ‘facing significant pressure’, adding that ‘without government action there is a real risk to the (airline) industry’.

Paul Johnson, director of the Institute of Fiscal Studies, said the business rates holiday was targeted directly at retail, leisure and hospitality businesses, but not ‘well targeted’ at saving the jobs within those industries. As such, he stated that it will remain ‘as expensive’ to pay salaries, making jobs the first to go in the event of lower economic activity.

British Retail Consortium chief executive Helen Dickinson said the measures will help to cushion falling demand and sales. ‘The business rates holiday, together with the announcement of a loan package, represent a vital shot in the arm for a sector facing enormous uncertainty. We still need to see the details and make sure that retailers can access cash with the minimum of delay, but it is a welcome and necessary first step to protect jobs.’

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