Firstly, to summarise the government’s key policies to help businesses:
- A temporary deferral of VAT and other tax liabilities.
- Rates relief and/or direct grants.
- A job retention scheme (ref. furloughing) to pay employees while they are not able to work.
- A self-employment income support scheme.
- A business interruption loan scheme.
There is no merit in regurgitating the details of each scheme here. We would again encourage anybody who is unsure of their eligibility or how to apply for any of the above, to feel free to contact us for help and guidance.
The most useful website for all details can be found by clicking here
It would be foolhardy to try and assess the economic impact at this stage in any detail, but I do think some aspects are already clear in principal:
- Most, if not all countries will experience a long and deep recession. Demand for non-essential goods will fall.
- International travel of people and goods will be severely interrupted; however, domestic tourism may see a benefit after the horrendous initial downturn as people choose or are restricted to UK travel.
- Businesses that rely on import/export of goods will be impacted – if the imported goods (e.g. food) can be produced domestically, that may increase UK prices.
- Unemployment rates will increase. Seasonal migrant labour will be initially more difficult to source but should return and/or be replaceable because of the higher UK unemployment.
- Interest rates will remain low for some time until demand in the economy picks up. As I write, the 30-year market costs of funds (before the banks add on any margins/costs) is a meagre 0.31%.
- Exchange rates will fluctuate depending on the relative recovery of the UK economy compared to others (particularly the Eurozone and the US). At today’s exchange rate a Euro is worth 87p and so we are starting from a relatively weak base.
- Taxes will inevitably increase to pay for the costs of the virus. Given the scale of the issue, it will almost certainly have to be the main taxes – Income Tax and Corporation Tax – and consequently the businesses that remain profitable will pay the price.
I do not think it too simplistic at this stage to say that the longer-term impacts of Coronavirus on farming businesses will be anything like as serious as to the wider UK economy.
Pat Tomlinson
May 2020
More News