April 2020 News Update – featuring additional news developments from our newsletter series
Welcome to August News Update – This month sees the Coronavirus cause unprecedented human and economic devastation. HM Government have launched “bounce back” loans to help business access support quicker, a “surge” in freelancing has been reported, Covid-19 could cost the UK economy nearly a trillion pounds over the next decade a think tank suggests.
“Surge” in Freelancing post-Coronavirus lockdown
According to PeoplePerHour, a freelance platform, an “unprecedented rise” in freelancers signing up and small businesses exploring freelance options occurred in the last four weeks. Nearly 100,000 new freelancers joined the freelance platform.
According to MoneyDonut:
“A leading online platform for freelancers has seen a four-fold rise in sign-ups as well as increased demand for specific skills including business planning and marketing.
Freelancer platform PeoplePerHour has reported an “unprecedented rise” in both freelancer sign-ups and demand for talent in certain key areas. During the first 26 days of March 2020, sign-up numbers on the platform surged to a massive 96,123 – an almost four-fold increase year-on-year.
The surge in freelancer activity is highest in London, which has seen an increase in the number of people turning to freelancing of almost 500%. In fact, the increase in London freelance sign-ups is more than 7.5 times higher than any other city in the UK.
Freelancer sign-up increases have also been significant in Sheffield (up 64%), Edinburgh (63%), Cardiff (53%), Liverpool (50%), Nottingham (39%), Bristol (32%), Leicester (31%) and Glasgow (29%).”
Covid-19 Could Cost UK Economy £800Bn, according to UK Think Tank
According to the National Institute of Economic and Social Research (NIESR), the UK economy looks set to lose out to the tune of £800 billion pounds over the course of the next decade. The think tank argues a new “forgotten decade” could occur. Furthermore, NIESR argues there will be a “deep scar” on the private sector and massive unemployment.
According to The Guardian:
“Britain’s economy is likely to lose out on £800bn of income over the next 10 years as the lockdown and a spike in unemployment leave deep scars on the private sector, a leading thinktank has warned.
The National Institute of Economic and Social Research (NIESR) said it expected the economy to bounce back next year, but not to its previous level and with the unemployment rate still above 5% after hitting 10.5% this year.
A second peak in the coronavirus outbreak or a prolonged shutdown into the summer would add between a third and a half more to the loss of income this year, NIESR added.
In its twice-yearly report, the thinktank said the efforts of the government to limit the economic impact of Covid-19 with loans, grants, and guarantees to thousands of businesses would send public sector debt to 95% of GDP next year, 12 percentage points above its current level.
“The government’s announced measures to limit the long-term economic effect of Covid-19 have a direct cost to the exchequer of about £75bn in our main-case scenario. Borrowing is likely to rise above £200bn in 2020–21,” it said.”
Treasury Announces, “Bounce Back” Loans to Help Struggling SMEs Access Credit
The Treasury has announced that loans of between £2,000 and £50,000 accessible within days and are 100% guaranteed by the Government will be available for businesses to cope with the Coronavirus demands on their business.
According to HM Treasury:
“Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced today (Monday 27 April).
Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.
The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.”
Government Unveil New “Support Finder” Website for SME Businesses
HM Government has created a “support finder” resource to help businesses struggling with what scheme could help them so that they can apply fast and gain from these schemes. The support platform will help sign-post businesses and the self-employed towards the correct scheme(s).
According to HM Government:
“A new ‘support finder’ tool will help businesses and self-employed people across the UK to quickly and easily determine what financial support is available to them during the coronavirus pandemic.
The finder tool on GOV.UK will ask business owners to fill out a simple online questionnaire, which can take minutes to complete, and they will then be directed to a list of all the financial support they may be eligible for.
Business Secretary Alok Sharma said:
Businesses of all shapes and sizes play a vital role in our economy, which is why we want to make it as easy as possible for all of them to access our wide-ranging package of financial support during this challenging time.
This online questionnaire takes just minutes to complete and will quickly signpost a business to the loans, grants, or other schemes they could be eligible for.
Chancellor of the Exchequer Rishi Sunak said:
We’ve launched an unprecedented package of support to protect jobs, businesses, and incomes during these challenging times.
Millions are already benefitting and this new online tool will allow firms and individuals to identify what help they are entitled to in a matter of minutes.
We are doing everything we can to make our support as accessible and as easy to navigate as possible.”