Government to provide guarantees of up to £10bn to trade credit insurance for business-to-business transactions
The UK government has unveiled the Trade Credit Reinsurance scheme, which will provide government guarantees of up to £10bn to help maintain trade credit insurance in the wake of the Covid-19 pandemic.
The government said the guarantees will support supply chains and help businesses during the coronavirus pandemic to trade with confidence, safe in the knowledge that they will be protected if a customer defaults or delays on payment.
Business secretary of state Alok Sharma said the scheme would offer “peace of mind to businesses”.
“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,” he said. “Our £10bn 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 economic secretary to the Treasury, 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.”
The government revealed that the scheme will be available on a temporary basis for nine months, backdated to 1 April 2020, and running until 31 December 2020, with the potential for extension if required.
The scheme will be followed by a joint BEIS/HMT-led review of the trade credit insurance market to ensure it can continue to support businesses in future.