Budget announcements are always highly anticipated by business-owners, but the most recent iteration is arguably the single most important for a generation.
The reason for this is simple; as the recently-appointed Chancellor Rishi Sunak’slatest announcement made a number of concessions to account for the Coronavirus outbreak. At the latest count, this pandemic has seen 225,627 cases arise across the globe, with 9,277 of these resulting in the death of the patient.
The budget, and a number of subsequent updates, have certainly provided some much-needed relief for entrepreneurs in the UK, but do they go far enough to provide businesses with the reassurances that they need?
What’s in the Budget (and Subsequent Updates)?
One of the first announcements confirmed that the incumbent government was to cover statutory sick pay for SMEs in the UK, enabling small businesses to cover the full cost of employees who are directly affected by Covid-19.
In total, the Tories will refund the total cost of statutory sick pay for up to 14 days, which is the length of time that the government is now advising people to self-isolate for if a member of their household showcases the symptoms of the Coronavirus.
In addition to this, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’, which initially pledged to support companies with a cumulative £1 billion in total lending. Individual firms will be able to source up to £1.2 million in loans, while the state will cover bank losses of up to 80%.
Subsequent to this, the government has also guaranteed a huge £330 billion of bank loans to firms to prevent them from going bankrupt in the wake of more stringent measures to combat the impact of the Coronavirus.
This will also enable such firms to cover their core costs, including rent, salaries and suppliers. This loan package is the equivalent to 15% of the UK’s total GDP, while it has also been augmented by the decision to slash business rates for all firms across every single industry.
Smaller firms have also been granted access to cash grants, with companies in some sectors able to claim up to £25,000 to support them as Covid-19 continues to undermine the global economy.
Do These Measures Go Far Enough?
For the time being, firms also retain access to flexible small business loans, which may be more than adequate to help firms in select sectors that may be only partially affected by the Covid-19 outbreak.
While the recent measures have been largely well-received, there remain concerns that firms will be loath to take on additional debt (even in the form of government backed loans), particularly as there are doubts as to how long the Coronavirus will impact on the UK economy.
There also needs to be further clarity provided for employees, who remain central if firms are to optimise productivity during difficult times.
While the government has pledged to suspend evictions and compelled mortgage lenders to offer payment holidays for a period of three months, for example, employees need to understand whether their finances will be safeguarded over a longer period of time.