Sunak says UK firms should not expect relief on rising debt burden

Rishi Sunak has said companies should not expect the government to help relieve their growing debt burden in the months ahead and that it is not sensible for the government to take equity stakes in companies.

The UK chancellor told MPs on Wednesday that corporate balance sheets were in a “healthy state” going into the crisis and the starting point was “pretty positive”. His remarks contrasted Andrew Bailey, Bank of England governor, who has repeatedly said the high level of corporate debt might undermine the recovery and the public sector should be ready ensure a response to “the need for equity capital”

“One thing I’d say is I’m not sure it is sensible for the government to have individual equity stakes in hundreds of thousands of businesses,” Mr Sunak told the Treasury Committee.

The chancellor said that he was now concerned only about the recovery and “looking forward” so he would not seek to address those that missed out on government support during the crisis, such as the self employed that operated as companies and paid themselves using dividends.

The chancellor refused to be drawn on whether he would announce deferred tax increases in the autumn Budget, but said people should not assume he was keen on a raid on capital gains tax because he had announced a review of the tax by the Office for Tax Simplification.

Tax rises of £60bn or a return to austerity will be needed to restore the UK’s public finances to stability after coronavirus, the Office for Budget Responsibility said on Tuesday, predicting government borrowing will reach £370bn this year.

Mr Sunak admitted on Wednesday “there were tough choices ahead” when repeatedly questioned about the possibility of tax rises in the months to come. 

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