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.
-
11 benefits you might be able to get when you retireWe outline 11 free perks that you may be able to claim once you retire, from Pension Credit and the winter fuel payment to a free TV licence and free prescriptions.
-
FCA sets new sustainability labels for green investment funds - what do they mean?
The FCA has unveiled its anti-greenwashing measures and labelling regime, affecting financial products like green investment funds and savings accounts. We explain how they work.
-
Can Lidiane Jones be Bumble's perfect match?
Dating app Bumble is taking on Lidiane Jones, a well-regarded leader in tech, as its new boss. Can she work her magic in a new arena?
-
UK millennials are worse off than previous generations
The evidence shows that millennials today are getting a raw deal. And, ultimately, that's a political choice.
-
The rise and fall of Sam Bankman-Fried – the “boy wonder of crypto”
Why the fate of Sam Bankman-Fried reminds us to be wary of digital tokens and unregulated financial intermediaries.
-
The jury's out on the AI summit at Bletchley Park
World governments gathered for an AI summit at Bletchley Park in November, but were they too focused on threats at the expense of economic benefits?
-
As a market correction begins, money is on the move.
The force of a market correction is equal and opposite to the delusion that preceded it, so we can imagine that the correction will also be unparalleled.
-
How small businesses can retain staff in a competitive job market
Small businesses are struggling to retain staff and compete against large companies with deep pockets.
-
The French economy's Macron bubble is bursting
Cheap debt and a luxury boom have flattered the French economy. That streak of luck is running out.
-
K-pop hitman Bang Si-hyuk aims to repeat BTS phenomenon
Bang Si-hyuk created the world’s biggest boy band, BTS, making K-pop music a global sensation and himself very rich. Can he repeat the trick with a girl band?
