Not only should the Government be offering more flexibility to businesses as they come out of lockdown, they should also provide guarantees to insurance companies (as they have done for the banks) so that credit insurance limits are not prohibitive to trading. Furthermore, the Government should provide financial support to commercial landlords to safeguard their cash flows. This would allow greater flexibility in their negotiations with tenants who have been hardest-hit by the pandemic.
The Government needs to continue to support UK businesses by allowing greater flexibility in the repayments of bank borrowings and deferred taxes for viable trading businesses.
It has to provide clarity on future fiscal policy to allow businesses to plan. They also need to be clear with the business community how they plan to deal with further rises in Covid cases and if this will include further lockdown measures. This will require support measures to be provided in a targeted manner – both by business sector and geographically – to ensure a fair playing field for businesses across the country.
For many businesses, the impact of the last 15 months will be felt for many years to come having left both mental and financial scars. The majority of owner-managed businesses in the UK have been able to access the support measures offered by the Government, most notably the furlough scheme and underwritten bank borrowing through the Coronavirus Business Interruption Loan and Bounce Back Loan schemes. This has allowed many businesses to survive, but now the focus must be on long-term growth and a stable business environment.
The Government should know that even for those businesses that are performing well, there are challenges ahead. The impact of Covid on mobility means there are shortages in the labour market as well as raw materials, resulting in many unfilled job vacancies and increasing prices for many businesses.
Existing support measures come to an end in the next few months, furlough is set to end in September and the previous support measures (including deferred tax and Government-supported borrowings) need to be repaid. Simply having the cash flow to invest in the future against an uncertain back drop is difficult for many businesses.
The business environment has changed rapidly and there is still further readjustment to come. Many businesses have depleted their built-up reserves in surviving the pandemic.
However, as they seek to operate at pre-pandemic levels they face the challenge of reduced credit insurance limits or difficulties in taking on new leases simply as a result of the reduced balance sheet totals many businesses now have. The end of Covid for many businesses will not happen now or in the near future, and they will be dealing with the after-effects for years to come.”
Would you like to know more?
If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact.
For any press queries, please contact David Barzilay whose details are on this page.
You can also visit our Coronavirus: Practical Guidance hub for more information.