Unlike previous setbacks to the UK’s efforts to reopen its economy, the latest four-week delay on easing lockdown will not be accompanied by further support for businesses. While many companies now face extra costs, having expected the remaining Covid-19 restrictions to fall away this week, they will not be able to claim any additional financial relief during the period up to 19 July, when lockdown is now due to end.
This is problematic for many companies still struggling with the impact of Covid-19. That includes firms hit directly – those in hospitality, for instance, where the most stringent restrictions still apply – and also those indirectly affected. They may be hampered by changes in consumers’ behaviour, say, or ongoing supply-chain disruption. Across the board, businesses are conscious that the existing Covid-19 support schemes are now beginning to wind down.
In particular, the business-rates holiday that retail, hospitality and leisure-sector companies have enjoyed since the start of the pandemic will end on 30 July. From 1 July until next April, these businesses will have to pay a third of the rates they would normally pay, even if they have no income to draw on.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
July also marks the beginning of the end of the furlough scheme, with employers expected to start making a 10% contribution to the cost of the initiative, rising each month until the scheme closes at the end of September. With the Resolution Foundation estimating that 8% of British workers remain on furlough, – 30% in the hospitality sector – this will have a large impact on a broad range of businesses.
Another problem is that while businesses have, since 1 April, been able to apply for Restart Grants worth up to £18,000 to cover the costs of reopening, many firms have spent this money in the expectation of being able to return to normal trading. Now their plans have been delayed, there is no more help available.
Elsewhere, the Bounce Back loans scheme and the Coronavirus Business Interruption Loan Scheme both closed to new applications on 31 March. For those firms reaching the first anniversary of borrowing, repayments and interest are now falling due. The schemes have been replaced by the Recovery Loan Scheme, though this is less generous and flexible than its predecessors.
Don’t expect a U-turn
The big picture is that life support for ailing firms is slowly being withdrawn, even in sectors where the government insists it is not yet safe to go back to business as normal. The Treasury insists that when various support schemes were introduced or updated in March, these were deliberately designed for a timetable of easing lockdown measures that was always at risk of delays. Nevertheless, many businesses will be disappointed by the lack of additional assistance. Groups such as the Federation of Small Businesses (FSB) argue that more help is necessary, particularly in the worst-hit sectors. The FSB wants an extension of the full business-rates holiday, a suspension of the tapering of the furlough scheme, and write-offs of Bounce Back loans for some firms.
Don’t hold your breath: ministers seem determined to hold the line on their plans for withdrawing financial support. But if you are still facing Covid-19-related problems, do make sure you are getting all the help promised. Many local authorities are still sitting on substantial funding for Covid-19 grants, for example, and some banks report slow take up of recovery loans.
-
The fastest and slowest places to sell a home – where does your area rank?Average time on the property market before selling a home can vary from 19 days to 62 days, depending on location.
-
Who won the £1 million jackpot in the May Premium Bonds prize draw?NS&I has announced the winners of May’s Premium Bonds prize draw. Who won the £1 million jackpot and how can you find out if you scooped a prize this month?
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Why are energy bills so expensive in the UK?Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tigerOpinion Markets are right to ignore talk of Putin invading Europe, says Max King.
-
Why French far-right leader Marine Le Pen has been banned from running for officeMarine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
-
Five years on: what did Covid cost us?We’re still counting the costs of the global coronavirus pandemic – and governments’ responses. What did we learn?
