COVID-19 News Bulletin 12/06/2020
As we are approaching the three-month mark of lockdown in the UK, life is beginning to return to something resembling normality for some. The UK now has the unenviable record of having one of the longest lockdowns in Europe and there is warning we could be set for recession according to the Organisation for Economic Co-Operation and Development (OECD) as we have begun to see some shops and business open their doors. Nations within the UK are still using their devolved powers on how to exit lockdown.
Reported this morning, the news that the UK’s economy shrank by 20.4% in April, the largest monthly contraction on record, as a result of a full one month in April on lockdown. The good news, analysts are saying that April is likely to be the worst month as the government began easing lockdown in May. The PM Boris Johnson said that he was not at all surprised by the figures and that big, big economic effects were expected. So the economy has shrunk, what’s propping up the rest? Mostly the state intervention. Some 8.9 million are now on the furlough scheme which has cost £19.6bn so far. Without such schemes household consumption, which makes up around two-thirds of the UK’s GDP, would have fallen either further.
This week saw Prime Minister take a turn to lead the daily press briefing, informing us that individuals who live alone can create a ‘bubble’ with another household of the same whilst the rate of infection is still believed to be decreasing. And the Government has revealed plans on how to open the likes of zoo’s and theme parks.
UK business were pleased to hear that the Government has u-turned on its decision to impose full border checks when the Brexit transition period end on 1 January 2021, having recognised that companies could not be expected to deal with additional measures while also dealing with the coronavirus pandemic.
In other Brexit news, cabinet minister Michael Gove has said that the government has formally confirmed it will not extend the Brexit transition period. The UK has left the EU but will remain in both the bloc’s customs union and single market until 31 December. Due to the pandemic, there had been calls for the government to push back the date. However, Scotland First Minister Nicola Sturgeon and First Minister of Wales, Mark Drakeford, both want to extend the transition believing it to be reckless to press on as scheduled. The Prime Minister is expected to hold talks with EU leaders next week.
According to the Office for National Statistics, the number of people testing positive in England is continuing to fall.
British Airways, Easy Jet and Ryanair have filed a formal legal challenge to the governments quarantine policy which they say will have a devastating effect on British tourism and destroy thousands of jobs.
Today’s government press conference was led by Transport Secretary, Grant Shapps. And here is a round up of today’s 5pm briefing;
When face covering on public transport become mandatory on Monday, travel companies will have the powers to be able to refuse travel and fines can be issued.
The message is still that if you can work from home, then you should do so. If you must go to work you should walk, cycle or drive, avoiding public transport and public transport at peak times as much as is possible and employers should be assisting employees with this.
The government is talking to various states about the possibility of travel corridors, where people coming to the UK would avoid the 14-day quarantine period. A review of the quarantine policy which came into force on 8 June is due at the end of this month.
Latest updates from us
In a previous bulletin, I did inform you of a Business Interruption Insurance expert who has had a lot of success with claims for business owners. We have been helping our clients with this for a number of weeks now and we are hearing some very positive outcomes and so wanted to share with you again in case you hadn’t yet had the chance to dig out your policy details.
They operate on a no win, no fee basis, so it’s a no brainer really.
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If this is of interest, please let me know and I will arrange for them to make contact to discuss things further.
Local authority discretionary grants are soon to be closing for applications. Remember to check if you are eligible for the discretionary grants available to small and micro businesses from local authorities and apply as soon as possible, as some councils have announced that they will close to applications this weekend.
Included in my last bulletin, however, I do want to make sure you are fully aware of the changes to the Job Retention Scheme to be able to consider your business model postlockdown. Government contributions will be tapered for the latter months of the scheme with employers also being asked to pay a percentage towards their employee’s wages. The changes will be introduced as follows:
July – no change, the Government will continue to pay 80% of wages capped at £2,500 plus employer national insurance contributions and minimum pension contributions.
August - employers will no longer be able to claim employer NICs and pension contributions under the scheme, but the Government will continue to pay 80% of wages up to £2,500.
September - the Government will pay up to 70% of wages capped at £2,187.50. Employers will be required to pay 10% of wages to bring employees up to 80% capped at £2,500 plus employers NICs and pension contributions.
October - the Government will pay up to 60% of wages capped at £1,875. Employers will be required to pay 20% of wages to bring employees up to 80% capped at £2,500 plus employers NICs and pension contributions.
In the markets
Global shares rallied strongly last week, and economic data showed signs of improvement. However, yesterdays falls are yet to be recuperated. However, as at around 3pm this afternoon, the markets were lifting. The fall yesterday was prompted by bad economic news and health news from the US. Thursday saw US markets slump by 7% and UK and Europe drop by around 4%. A bleak view of the US economy from the Federal Reserve and reports are rising Covid cases is some US states was the trigger. These falls followed a week-long rally that had helped shares recover some ground from the lows seen since March. Last weeks surprise report of US unemployment figures being better than expected helped the markets lift.
All eyes are still on China as we watch for their economic recovery. The UK and US are a couple of months behind the curve compared to China so is currently the watched benchmark. And over the last few weeks it has been mostly positive news with increased road traffic, retail footfall and energy consumption all increasing which points to a recovery.
FTSE 100 performance over the last month
We are certainly likely to see volatility and sensitivity in the markets over the coming week. As we always advise, investments are all about the long game.
Should you have any concerns or questions, we are here for our clients and will happily arrange a telephone or video call appointment to provide guidance, please either call our practice mobile 07543 368 478 or email enquiries@TheIFAs.com to arrange your appointment.
I hope you enjoyed this weeks’ update and if you need to discuss anything in todays bulletin, do get in contact.