Budget to unveil supply-chain insurance plan - report

A state guarantee scheme to underpin vital supply-chain insurance is set to be announced by Chancellor Alistair Darling in next week’s Budget, according to government insiders, the Financial Times reported.

The credit insurance scheme will form a centrepiece of the Budget initiatives to help small to medium-sized businesses cope with the recession, the FT said. Its unveiling marks the culmination of months of negotiations with insurers spearheaded by Lord Mandelson, the business secretary, the paper said.

The initiative is in response to a sharp reduction in credit insurance, which protects companies that supply goods on credit against the risk that they will not be paid.
The scarcity of credit insurance could threaten hundreds of supply chains, according to the FT.

The government scheme is expected to offer guarantees for companies that have seen their cover reduced but not withdrawn.

In January Accountancy Age revealed that Euler Hermes, the UK’s largest trade credit insurer, had restricted the terms of its cover, saying the move would help customers weather the recession.

Further reading:

Budget to unveil supply-chain insurance plan

Euler Hermes hits back as credit row escalates