The impact on the economy and individuals’ livelihoods has been severe, despite the Government’s actions. Output fell around 25 per cent between February and April, reversing 18 years of economic growth in just two months, before starting to pick back up from May as the economy reopened.1
While GDP grew by 15.5 per cent in Q3 2020 as restrictions on movement eased, GDP in September remained 8.2 per cent below the levels seen in February 2020. Since March 2020, the number of payroll employees has fallen by 782,000.2
The impact will have been felt hardest by those who work in the hospitality, entertainment, retail sectors, and related industries. Timely measures of activity, such as mobility, have shown falls in England across November.3 The latest consensus of independent forecasts published by HM Treasury in November also suggests that the economy will contract again in Q4.4
The Office for Budget Responsibility (OBR) will publish their overall economic and fiscal forecast on 25 November.
The Government has unveiled various measures over the past few months to support the economy and protect jobs across the UK with the Coronavirus Job Retention Scheme, Self Employment Income Support Scheme, as well as a number of support schemes for businesses.
Support schemes introduced include:
1. Coronavirus Job Retention Scheme (CJRS): CJRS has been extended until the end of March 2021 for all parts of the UK, with employees receiving 80 per cent of their usual salary for hours not worked, up to a maximum of £2,500 per month. Read more.
2. Self-Employment Income Support Scheme (SEISS): SEISS is in place until April 2021. The scheme is currently in its third stage and will offer grants to the self-employed at 80 per cent of average trading profits for November to January, capped at £7,500 in total. Read more.
3. Access to Finance schemes:
Under the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the Government provides lenders with an 80 per cent guarantee to enable them to support viable small and medium sized enterprises (SMEs) and larger businesses respectively.
Under the Bounce Back Loans Scheme (BBLS), the Government provides lenders with a 100 per cent guarantee to enable them to provide loans between £2,000 and £50,000 to small and medium-sized businesses with a simple, streamlined application process.
All three government-backed loan schemes are open until the end of January 2021. Read more.
4. Local Restrictions Support Grants: Businesses in England that are forced to close will receive up to £3,000 for each 28 day period. Where businesses have not been required to close but have been severely affected by restrictions in tier 2 or tier 3 areas, local authorities will receive funding that will enable them to make grants worth up to £2,100 for each 28 day period.
5. Business Rates holiday: All eligible businesses in the retail, hospitality and leisure sectors will pay no business rates in England for 12 months from 1 April 2020, and child care nurseries in England will also receive a one-year holiday.
6. Increased funding for the welfare system through a £20 per week increase to the Universal Credit standard allowance and Working Tax Credit basic element for 2020-21, and an increase in the Local Housing Allowance rates for Universal Credit and Housing Benefit claimants. These changes are collectively worth over £7 billion this year.
7. Reduced VAT rate for hospitality and tourism: The Government is extending the reduced VAT rate of 5% for eligible businesses in the hospitality and tourism sectors until 31 March 2021.
8. Devolved administration funding: The Government is guaranteeing at least £16 billion in funding this year to the devolved administrations on top of their spring Budget 2020 funding: Scottish Government – £8.2 billion, Welsh Government – £5.0 billion and Northern Ireland Executive – £2.8 billion.
9. Funding for cultural organisations, charities and spectator sports via the £1.57 billion Culture Recovery Fund; a £750 million package of support for charities; and a £300 million Sport Winter Survival Package.
Overall, the Government has acted to support individuals and businesses through this challenging period with an unprecedented £200 billion.
For further information about the Government measures to protect individuals and businesses, visit our COVID-19: Support for UK businesses hub.