2020: what a year it’s been!
The year started on a bumpy road, with Brexit being confirmed and many businesses being unsure about how that would impact their future.
Just a few months later and ‘coronavirus’ is hitting front page newspapers. Before we know it we’re all in lockdown and businesses are left wondering – can things get any worse?
Can Things Get Worse?
It turns out that it can.
The Federation of Small Businesses have released a report detailing that 23% of businesses have already cut jobs due to the coronavirus pandemic.
This figure comes at a time when a lot of support has been available to businesses, with the Furlough Scheme paying 80% of workers wages, plus their NIC and pension contributions.
Now that the furlough scheme starts to wind down, that figure will likely rocket up until November when the scheme officially ends.
The Furlough Scheme has covered over 9million workers since April, but employers are now required to pay NI & Pension contributions for any staff that are still on Furlough.
This obviously could be a lot worse – some support is still available. But these changes require businesses to spend more on their staff, and if they haven’t been able to return to a sustainable income, then job losses will be a certainty.
Is Coronavirus Worse Than Brexit?
How have things got so bad, so quickly?
Of course, Coronavirus has shaken the foundations of our economy, but the problems for businesses have been around for longer than Coronavirus.
Since the EU referendum, businesses have felt uncertain about the future.
We’ve written numerous blogs detailing how businesses have held back on investing, and have waited to see how the landscape shifts.
In fact, for 7 consecutive quarters the number of businesses who have been identified in Red Flag’s credit scoring system as ‘in distress’ has increased.
They also estimate that around 1.7m jobs are under threat.
This means that for nearly two years, businesses have been declining.
Delaying The Inevitable
The pandemic has both presented new problems, and also accelerated problems that previously existed (such as low high street sales, and Brexit uncertainty).
Many argue that the support measures haven’t truly helped, instead they have simply delayed the inevitable.
Despite the very different nature of both Brexit and Coronavirus, both have led to a loss of confidence in business owners.
Some will bounce back to a state of uncertainty surrounding Brexit. Others may not bounce back at all.
It’s at times like this that government support is critical, not just to patch over problems with plasters – but to spot the true causes of the struggle that many businesses have been facing for a very long time.
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