Rumours have been circulating that the government might wipe off COVID-19 debt that small and micro businesses have racked up.
The idea has quickly gained notoriety after the former chancellor of the Exchequer, George Osborne, called for the treasury to eventually wipe off the billions of pounds owed.
Why Might The Debt Be Forgiven?
Forgiving debt isn’t a new concept, but it would be a huge move if the government decided to move forward with a plan as ambitious as George Osborne’s.
His reasoning is simple – businesses like these are ‘engines of growth’ in this country, the last thing we want to do is strangle them with debt and stunt their growth at a time the nation needs it most.
This comes from a man who once sat in the very same seat, where big decisions like this are made.
Mr Osbourne isn’t the only former Chancellor of the Exchequer who is thinking along these lines.
Is Returning To Austerity A Big Mistake?
The former Chancellor Sajid Javid takes a more conservative approach than George Osborne. He actually acted as Rishi Sunak’s boss, before he passed on the role to him.
However, he believes in the same premise – businesses need support.
It’s reported that 2.5 million workers are currently out of work due to the coronavirus pandemic and Sajid Javid, another former Chancellor, suggests returning to cuts and austerity would be a big mistake.
His short term vision is to cut the national insurance, which would help businesses feel confident enough to hire workers again.
“Tax employment less, and all other things being equal you will end up with more of it.”
Big Decisions To Make
About 2/3rds of debt has gone out through the Bounce Back Loan scheme – meaning that small and micro businesses have been accessing support from the government in droves.
However, nearly half of these businesses say that they have no intention to pay back these loans, whether through choice, or because their business simply won’t make it anyway.
It’s clear that the current chancellor Rishi Sunak has some big decisions to make, and will be listening closely to his predecessors words of warning.
Sunak had initially suggested when the loans were first released that this would bring heavier tax bills to the self-employed and other small businesses.
However, as news breaks that the UK’s debt is now at a greater number than the economy itself – will there be a U-turn from his previous plans?
Get More Business Blogs Like This
Interested In Our Accountancy, Tax, Bookkeeping & Payroll Services?
Get In Touch Below