COVID-19 News Bulletin 18/06/2020
Recent news Breaking news today was that the Bank of England will inject a further £100bn into the UK economy to help the coronavirus-induced downturn with another round of quantitative easing. Bank policymakers voted to increase the size of its bond-buying programme. The good news, it was said that there was growing evidence that the hit to the economy would be less severe that initially feared. The Bank’s Monetary Policy Committee (MPC) also kept interest rates at the record low level of 0.1%. So what is quantitative easing meant to do? During economic hard times the Bank of England would normally try to make things better by cutting interest rates. Lowers rates of course mean that you get less interest on your savings so its attractive to spend money or borrow for that new car or new house. People buying helps the economy stay healthy, protects jobs etc. But when interest rates are just above zero as they are currently, there is no scope for another cut in rates. So the Bank looks at quantitative easing to encourage spending and investing. This is the creation of new money. This is used to purchase government bonds which are a type of investment where you lend money to the government and in return it promises to pay back a certain sum in the future as well as interest in the meantime. Buying billions of pounds’ worth of bonds pushes the price up as demand grows. So if these government bond prices go up, interest rates on loans to individuals and businesses should go down, as many loan interest rates are linked to the price of government bonds. This cheaper lending makes it easier for people to borrow and spend money. Resulting in a boost to the economy.
Other latest C19 developments, in a major U-turn, the UK is abandoning the underpinning of its existing coronavirus tracing app and switching to a model based on technology provided by Apple and Google. The government has had to defend test and trace figures after it was shown that one in four of those who tested positive for the virus could not be reached by authorities.
Scotland’s leader Nicola Sturgeon announced today further relaxing of measures in Scotland. From next Monday, all shops, except those in indoor shopping centres will be allowed to reopen and also from Monday, face coverings will be mandatory on public transport and Scotland’s dentists are allowed to re-open for urgent care.
Cases in Beijing are still on the rise with authorities warning people that the number of cases of Covid is likely to increase over the next few days and people are being encouraged not to leave the city as fears grow of a lockdown similar to that in Wuhan at the start of the pandemic.
What did we learn from today’s press briefing given by Health Secretary Matt Hancock and accompanied by the head of the test and trace systems Dido Harding? Mr Hancock discussed vaccines, saying that adults over the age of 50 and those with heart or kidney disease will be prioritised if and when a vaccine is ready, but a deal has been struck to produce the Oxford vaccine so that it can be manufactured and will be ready should the science be correct. Todays update on the track and trace system was delivered during today’s briefing, Mr Hancock said that while the UK’s app worked well on android devices, Apple’s software prevents iPhones from effectively using contact tracing, going on to say that the government are only interested in what works well and so will be joining forces with Apple and Google to bring the best bits of both systems together, adding that the NHS test and trace system is working well. When asked when the app will be ready, Mr Hancock declined to state a date but “it is being worked on”.
For all those in the shielding group, the 2 million people with medical conditions who have been told to stay at home since March, can expect to receive a letter from the NHS before the end of the month.
The Department for Education is working hard on making sure all is done to ensure a safe restart of universities come the Autumn. A question was raised on whether the government will make it easier for people to work from home after lockdown is eased. Matt Hancock responded saying that people have learned about the opportunity provided by being able to work from home using technology and said that this practice is likely to stay with us for some time and that where possible employers should make this available and he will discuss further with the Business department on this point.
Latest updates from us
**NHS Pension - Scheme pays deadline extended for pension scheme**
For those clients who are members of the NHS pension scheme, the voluntary scheme pays election deadline has been extended to 31 October 2020 for tax bills relating to 2018- 19. This has been extended by three months to help staff avoid missing the annual deadline during the COVID-19 response.
As a member if you elect to use scheme pays, the NHS Pension Scheme will pay your annual allowance tax bill to HMRC on your behalf, with the member’s benefits in retirement being reduced by a corresponding amount. This option means that members do not need to settle any pension tax bills with cash up-front.
The scheme pays deadline for mandatory scheme pays remains as 31 July 2020.
Employees must notify NHS Pensions of their intention to use scheme pays before the annual deadline for the relevant tax year.
The extension of the voluntary scheme pays deadline will be reviewed again at the end of July.
Do get in contact to discuss if you believe you may have an annual allowance charge and we’ll be happy to advise you further.
In the markets
(taken from BBC.co.uk just ahead of close this afternoon)
Last week was an interesting week on the markets as discussed in last weeks bulletin. However, by the end of last week the markets had recovered from the worst of the losses of the week. Monday saw another drop however later in the week global markets rebounded enthusiastically, presumably on the back of the US Fed’s plan to buy corporate bonds and the expanded stimulus from the Bank of Japan. So still a volatility market currently and we will have to wait to see if the bank of England’s announcement earlier today has an impact. The potential threat of a second wave is doing nothing to help the markets recovery or level of volatility and the potential for a second wave global appears to have the possibility of coming sooner rather than later, taking for example developments in Beijing and case numbers are on the rise in 21 US states currently. It will be worth watching next week to see if there are signs that the recent protests have catalysed an increase in infections and to monitor developments in China where scientists have said that the virus may have mutated into a more contagious strain. On a more positive note, the opening on Monday of non-essential shops in the UK is an aid to the economy and numerous vaccines and therapeutics are showing promise in early trials. There are encouraging reports about willingness to compromise on both sides to reach a Brexit deal as polls indicated this week that Boris Johnson is under pressure to avoid a nodeal departure. And President Trump is reportedly considering a new $1trn infrastructure spending package.
FTSE 100 performance over the last month (taken from BBC.co.uk)
Since my last bulletin on 12th June, there has been a further rise despite todays slight downturn.
And for those of you monitoring cryptocurrencies, here’s an update on the top ones to watch at the moment.
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.