16/04/2009 - Budget may offer small firms cover
Next week's Budget could offer help to small and medium-sized businesses through new Government guarantees on trade credit insurance, it has been reported.
Many insurers have been raising their premiums or withdrawing from high-risk areas in the downturn, which businesses would normally use to cover themselves against the risk of non-payment for goods supplied.
The Financial Times has now said Chancellor Alistair Darling is set to step in by offering guarantees for medium-risk companies which have seen their cover reduced, but not withdrawn.
Business Secretary Lord Mandelson and insurers have also reportedly been in talks for months over the extent of the cover, the size of the state guarantees and the risks to be borne by the insurance firms themselves.
The industry has called for £5 billion, but while details of the scheme have not been finalised, it could fall short of this amount, the FT said.
Businesses will have to wait to find out if anything will be forthcoming with a spokesman for the Treasury saying: "As with all decisions, the Chancellor makes his announcements in the Budget."
Copyright © Press Association 2009
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