July 15, 2020 / 1:55 PM / a month ago

UK's Sunak unconvinced over equity stakes in struggling firms

LONDON, July 15 (Reuters) - British finance minister Rishi Sunak said on Wednesday he was not convinced that it would be necessary or practical for the government to take equity stakes in businesses that have borrowed under government coronavirus schemes.

Some analysts have warned that many businesses may to struggle to repay coronavirus loans, and that a solution could be for the government to write off the debt and take a stake in the businesses instead.

Sunak told lawmakers this would not be practical on a large scale, and said it was not clear there would be a problem.

“I’m not completely persuaded of the scale of the problem at the moment. The simple reason is that we know corporate debt levels in the UK were in a relatively healthy place coming into this crisis,” he told parliament’s Treasury Committee.

Businesses have borrowed more than 45 billion pounds ($57 billion) under various government programmes, with lenders receiving a 100% government guarantee for loans to the smallest companies. ($1 = 0.7926 pounds) (Reporting by Andy Bruce and William Schomberg, writing by David Milliken; editing by Alistair Smout)

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