The guarantees are expected to support supply chains and businesses during the Covid-19 pandemic, enabling them to trade in a safe environment
UK government offers £10bn guarantees to Trade Credit Insurance. (Credit: GOV.UK.)
The UK government has announced that it will provide £10bn in guarantees to Trade Credit Insurance, which offers essential cover to a number of business-to-business transactions.
The government said that the Trade Credit Reinsurance scheme has been granted after thorough discussions with the insurance sector and is aimed at maintaining expanded coverage for Trade Credit Insurance across the UK.
The guarantees are expected to support supply chains and businesses during the Covid-19 pandemic, enabling them to trade in a safe environment and know that they will be protected if a customer defaults or delays on payment.
State Business Secretary Alok Sharma said: “Trade Credit Insurance is a daily necessity for hundreds of thousands of businesses across the UK – particularly those in non-service sectors such as the manufacturing and construction sectors.
“Our £10 billion guarantee gives peace of mind to businesses, allowing them to continue to trade and maintaining liquidity in supply chains. This reinsurance scheme is an important step as we carefully set about firing up our economy as we emerge from the pandemic.”
The government to offer Trade Credit Insurance scheme on a temporary basis for nine months
The government said that its decision to provide guarantees, along with other financial support marks a critical step in driving the recovery of the UK.
The scheme will be offered to insurers operating in the UK market on a temporary basis for nine months, backdated to 1 April 2020, and valid until 31 December 2020, with plans to extend according to the requirement.
In addition, the scheme would be followed by a joint BEIS/HMT-led review of the Trade Credit Insurance market, empowering it to continue supporting the businesses in the future.
UK Treasury Economic Secretary John Glen said: “Billions of pounds of business turnover is supported by Trade Credit Insurance each year.
“This reinsurance scheme will see the government and insurers working closely together to ensure that the vast majority of this cover remains in place. This means that businesses and supply chains can continue to be protected at this pivotal time as we begin to kick start the economy.”