Budget 09: trade credit plan has cool welcome

The government’s move to pump £5bn into the insurance market to help stave off the threat of company collapses has been given a lukewarm reception by the world’s biggest insurer.

The scheme will see the government become a trade credit insurer providing cover
that the private sector has withdrawn.

But the CEO of Euler Hermes UK said the number of companies taking part in the scheme may not be great because only the most robust businesses will qualify.

Fabrice Desnos said: ‘We don’t expect the take-up for the scheme to be very high but if it makes a difference for a thousand SMEs where credit insurance is a significant component of their business model, then it will have been a success.

‘The scheme recognises that some risks will not be worth taking and this is an important point: this scheme is not about bailing out bad businesses, it is all about protecting good businesses.’

The jury is still out among accountants as to whether the scheme will shore up the system.

Tarlok Teji, head of retail at Deloitte, said: ‘It is clearly too early to judge whether the proposals will be a success or not.’

More news:

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Budget 09: business dismisses ‘trivial’ Budget