The “economic emergency” caused by Covid-19 has only just begun, according to chancellor Rishi Sunak, as he warned the pandemic would deal lasting damage to growth and jobs. Official forecasts now predict the biggest economic decline in 300 years.

Responding to the Chancellor’s spending Review, The Money Advice Trust is calling for urgent action to address the household budget emergency facing millions.

Joanna Elson OBE, Chief Executive at the Money Advice Trust said “The Chancellor today spoke of the ‘economic emergency’ facing the country – but millions of people are facing their own economic emergency in the coming months, as they struggle to meet day-to-day bills.”

“Today’s announcement of additional support to help households that are least able to afford council tax is welcome and will go some way to support those most in need.  With unemployment continuing to rise, however, we hope this will be joined by much more support – including extending the extra £20 a week increase in Universal Credit well beyond April.”

Stephen Haddrill, Director General of the FLA, said “The creation of a National Infrastructure Bank and the £100 billion levelling up fund will help address long-term regional disparities in the UK.”

“Our asset finance members are very well placed to help. Infrastructure projects by their very nature require specialist knowledge of the business sectors involved, and the region in which the work is to be done.

“Asset finance firms are already working with local authorities on numerous projects. Their expertise should be leveraged by Government as it rolls out its economic recovery plans.”

Chris Leslie’s CEO of the Credit Services Association (CSA) said “The OBR’s forecast of an economic contraction of over 11% this year and unemployment rising to 2.8million underlines the challenge over the coming years. While debt levels may rise, the ability for some borrowers to sustain repayments may be strained. Collections agencies have shown tremendous forbearance throughout the course of the COVID crisis and will continue to do so. There are many who depend on funds being recovered – including small businesses and the taxpayer – and so if individuals can afford to make repayments it is in everyone’s interests that they do so. We hope that, beyond the period of regulated payment deferrals, payment plans can be based on the assessment of individual affordability.”

“We note with interest that the Office for Budget Responsibility forecast a fall of over 14% in consumer spending in this financial year, but predict recovery of 8.7% in 2021/22 and then over 11% in 2022/23. Consumer confidence will be integral to the health of the economy and credit markets generally.”

“While the country looks to recover from the COVID pandemic and worst economic downturn for centuries, interventions from Government supporting consumers, businesses and the wider economy are more important than ever. Chancellor Rishi Sunak placed particular emphasis on learning and development investment in his one-year Spending Review which are of particular relevance to our sector.”

On the training and employment support announced by the Chancellor, Leslie said:“The Chancellor’s £2.5bn additional investment in apprenticeship programmes is very welcome. The credit services sector is improving skills and staff capabilities each year and the new flexibility announced on transferring unspent apprenticeship levy funds to SMEs and extending the incentive for employers to hire an apprentice to the end of March 2021 are positive steps.”

“The six month subsidy for young employees under the £2bn ‘Kickstart’ scheme is due to deliver 250,000 new posts – and our sector is eager to play its part in this. CSA members have already responded positively to the Kickstart scheme, which can be followed by apprenticeships and supported with other training options for young people as they start careers in credit services. The CSA is offering to act as a ‘gateway organisation’ so that member firms not able to employ above the threshold of thirty placements directly can still access Kickstart at a more manageable level via their trade association. The CSA also offers a strong apprenticeships programme including in Credit Control and Collections, Compliance & Risk and Counter Fraud Investigation. ”

“Taken together with the new £3billion three year ‘Restart’ scheme overseen by the DWP aimed at supporting a million people back into work, we believe that our member firms will be keen to ensure their training and development plans work in harmony with these government programmes.”

Michael Izza, ICAEW Chief Executive, said “While today’s debt figures are eye-watering, if the Chancellor borrows prudently while interest rates are low, then he should be able to get the economy back on track. Nevertheless, it’s clear from today’s forecasts that the fallout from COVID-19 will hang over the next few years, if not the whole decade.’

“Businesses need help now, but will also require support for the future, so the announcements on infrastructure investment, innovation and jobs are welcome. However the level of borrowing required to secure our post-pandemic recovery will take generations to repay, heaping more intergenerational debt on top of that still owed from the last financial crisis.”

“The Chancellor’s announcement comes at a critical time, with less than 40 days until the end of the Brexit transition period. Politicians should be moving heaven and earth to secure the best possible trade deal to help stimulate and sustain our economic recovery.”

ReSolve Managing Partner, Mark Supperstone, said “We are delighted by the news delivered out of the Commons yesterday around the increase in the Government borrowing, and subsequent spending, which comes at a time when many businesses are still firmly in the grips of economic uncertainty. While the plans are not directly focused on the small and medium sized businesses (SMEs) that ReSolve primarily works with, the news does provide some fresh air for SMEs, which have been contending with toxic uncertainty for many months.”

“With the economic growth expected to come with the Government’s planned allocations, SMEs can also expect to see an uplift in trading as other firms get back to some form of ‘normality’, through a knock-on effect. This is especially true for regional businesses, with a planned £2bn to be pumped into transport along with the £3bn promised for a three-year restart programme to help businesses obtain the resources needed to begin trading at a viable level again.”

“We hope that today’s news has given ailing businesses a ray of light and hope that a new day has begun. For those who are still unsure of how financially well-equipped they are going to be come spring, they should immediately start looking at their numbers and make the necessary decisions now instead of waiting until it’s too late.”

Chirag Shah, CEO, Nucleus Commercial Finance said “We’re pleased to see the Chancellor announcing ambitious spending plans, providing much-needed cash injections into the UK economy. After a challenging year protecting jobs is vital, and will help buoy spending supporting SMEs across the UK. The focus on increasing spending in local communities reflects the nation’s sentiment – we want to see our local areas, shops and high streets succeed. For UK SMEs, this will hopefully translate into renewed support from both government and through consumer spending.”

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said “A government which claims to be pro-enterprise had very little to say today about the importance of business and private sector job creation.”

“This Spending Review was a missed opportunity to help small business owners – not least those who have been excluded from support measures. We have outlined a workable Directors Income Support Scheme and we need to see those proposals taken forward.”

“Today brings the need for a pro-business Spring Budget into focus. Rather than being a tax-raising Budget, it must have growth and recovery at its heart.”

“Depending on the spread of Covid and restrictions over the coming months, very significant interventions may well be needed far sooner than the Spring. We will at least need to see meaningful action to spur business and job creation by the time the furlough scheme is reviewed in January.”

“The economic forecasts outlined today are stark. Our hopes of recovery will hinge on the success of small businesses. We need to see far more from this Government where reducing tax on enterprise, facilitating start-ups and bringing down operating and employment costs are concerned.”

“That said, commitments to a new UK infrastructure Bank, Levelling Up Fund and UK Shared Prosperity Fund are good to see. We’ve always said that replacing EU funding for business support would be critical as we move to a new relationship with Europe, and our recommendations have been taken on board.’

“It’s vital that – as these new initiatives are rolled out – small firms are brought into the supply chains of capital expenditure projects and paid on time. The announcement of measures to aid the sharing of apprenticeship levy funds with small firms down supply chains marks an important step forward.”

“For too long, our transport, broadband and mobile infrastructure has lagged behind other major economies. We welcome efforts to tackle this issue head on. The Government has listened to the expert Low Pay Commission where the National Living Wage is concerned, and that marks the right approach. “

“We’ve heard an awful lot about government debt today. We should also remember that previously thriving small firms have had to take on significant borrowing to keep the show on the road and pay for safety measures. Come the Spring, when repayments start to fall due, many will be extremely stretched. A pro-business Budget at that juncture will not just be important, but essential.”

Dr Gordon Fletcher, expert in retail and the economy at the University of Salford Business School said “The Chancellor’s spending reviews statement does not make easy reading. His own use of the term, ‘economic emergency’ provides the headlines against a predicted contraction in the economy, unemployment reaching 7.5% next year and government debt nearly rising to match GDP in five years’ time.’

“And that is all without a single reference to Brexit in the statement. Recognising the scale of the problem is part of the solution. However, the actions being offered feel less ambitious than the scale of the problem being faced. Without too many details the increase of 3.8% or £14.8 billion to government departments may support that solution – or not.

“A £6.6 billion increase for health and the promise of new hospitals is to be expected and £2.2 billion for education is welcome, although the statement is not specific on how much of this goes to the longer-term project of rebuilding 500 schools.”

“Irrespective of these details the overall increase sets a benchmark for the more direct forms of support being offered; £250 million for tackling rough sleeping and a £4 billion levelling-up fund for local authorities but managed by central government. Both initiatives offer a glimmer of hope but lack ambition in terms of their scale or purpose. Instead the initiative and impetus is left to a UK Infrastructure Bank to work with the private sector to fund the promises of the spending review.”

“This decision ultimately reflects the tension for a Conservative government committed to ‘small government’ finding itself in the unenviable task of delivering a crisis budget.”