The Government has said it will guarantee up to £10 billion in trade credit insurance schemes in its latest move intended to support UK business in the face of coronavirus.

Trade credit insurance protects firms from the risk that their customers collapse before being able to pay for goods or services.

The state guarantees mean that the vast majority of current insurance coverage can be maintained despite current uncertainty, the Government said.

Trade credit insurance covers around 630,000 businesses in the UK each year.

Insurance firms had called for Government support in order to continue offering coverage after a surge in claims during the pandemic.

The Government said it is backing the market through a reinsurance scheme which will allow trade credit insurers to buy cover for themselves from the state.

The scheme will be backdated to April and will operate until the end of 2020.

Business Secretary Alok Sharma said: “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.

“Our £10 billion 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.”

Adam Marshall, director general of the British Chambers of Commerce, said: “The launch of a Government-backed guarantee to support the provision of trade credit insurance will help ensure that this vital lifeline remains available to businesses during and after this crisis, helping to maintain supply chains and trade.”

For most manufacturers, credit insurance is essential, giving them certainty that they will be paid for the orders they deliver

Stephen Phipson, chief executive officer of Make UK, said: “For most manufacturers, credit insurance is essential, giving them certainty that they will be paid for the orders they deliver.

“We’re pleased that the Government has taken action to jump-start the credit insurance market, which will provide a welcome boost to our nation’s makers as they recover from the Covid crisis.”