Jeremy Hunt this morning said there is a ‘serious risk’ to UK tech firms following the collapse of Silicon Valley Bank – but Labour’s Rachel Reeves said she is concerned about the urgency shown by the government.
Chancellor Jeremy Hunt has warned that the collapse of a US bank could have a devastating impact on UK tech firms.
He said there is a “serious risk” to the UK’s technology and life sciences sectors as a result of the collapse of Silicon Valley Bank.
The Bank of England announced on Friday that Silicon Valley Bank UK is set to enter insolvency, following action taken by its parent company in the United States.
Mr Hunt told Sky’s Sophy Ridge On Sunday programme: “There is no systemic risk to our financial system, so people should be reassured on that basis.
“But there is a serious risk to our technology and life sciences sectors, many of whom bank with this bank.”
But he would not commit to ploughing public money into supporting businesses that could face collapse.
Labour has questioned the urgency of the government response. Shadow chancellor Rachel Reeves has urged the Government to offer more than “warm words” to companies affected by the collapse.
She said: “I am slightly concerned about the urgency that you heard from the Chancellor there because when markets open tomorrow morning, a lot of businesses in the UK are not going to be clear about how they can pay the wages of their staff and whether their deposits with Silicon Valley Bank and their financing arrangements are still in place.
“So, I would urge the Government to do more than offer warm words, but come forward with specific plans.”
She described it as a “wake up call” demonstrating the reliance on foreign capital. “We can’t let the British startup community to pay the price for the bank collapse,” she told the BBC’s Sunday with Laura Kuenssberg.
Mr Hunt claimed that he and Rishi Sunak are “absolutely determined” to protect companies impacted by the collapse.
He said: “The Prime Minister and I and the Governor of the Bank of England are absolutely determined to do everything we can to protect the future of these very, very important companies,” he said.
“We will come forward with a solution that helps those very, very important companies with things like payroll and their cash flow requirements, but we also want to put in place a longer-term solution so that their futures are secure.”
Asked if that could mean stepping in with taxpayers’ money, he said he did not “want to go into what the solution is”.
In a statement this morning, the Treasury said it is treating the issue “as a high priority”.
“The Government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK and we will bring forward immediate plans to ensure the short-term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met,” the statement said.
“The Government and the Bank understand the level of concern that this raises for customers of Silicon Valley Bank UK, and especially how it may impact on cashflow positions in the short term.”
It added that the Government recognises that the Silicon Valley Bank UK’s (SVBUK) failure “could have a significant impact on the liquidity of the tech ecosystem”.
While Silicon Valley Bank (SVB) has a limited presence in the UK and does not perform functions critical to the financial system, the Coalition for a Digital Economy (Coadec) warned that its collapse could have a significant impact on tech start-ups.