GDP drops 20% – Covid-19 business news 12 June 2020.
12 June 2020.
James Salmon, Operations Director.
We look at the record fall in GDP, coming job losses, general covid-19 news and the fall on the markets as a fears of a second wave take hold. Also we look at household savings, the furlough scheme, business investment and a lot lot more.
The Covid-19 lock-down continues and we are having to make do in a new normal.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Covid-19 general news
The UK Government is facing calls from Tory backbenchers to drop the 2m social distancing rule in England. MPs, including former cabinet ministers Sir Iain Duncan Smith and Damian Green, say it is essential for the economy. The government has said it is constantly reviewing its coronavirus lockdown guidance.
More than 31,000 close contacts were identified during the first week of the test-and-trace system in England, figures show. Of those, 85% were reached in 24 hours and asked to self-isolate for 14 days.
A&E figures have dropped as Covid-19 keeps people away from hospitals. Accident and emergency attendances at hospitals in England were down 42% last month compared with a year ago. A total of 1.3 million attendances were recorded in May, down from 2.2 million attendances in May 2019.
The number of deaths from people who tested positive for covid-19 has climbed 151 to 41,279 people in the UK as of 5pm on Wednesday. Government figures do not include all deaths involving Covid-19 across the UK, which is thought to have passed 52,000.
Global Covid-19 infections surpassed the 7.5 million mark
South America now accounts for a third of the daily new cases.
Meanwhile the World Health Organisation warned that the covid-19 pandemic was “accelerating” in Africa, having up to now, escaped relatively lightly, recording just 200,000 or so cases and 5,000 deaths. The WHO mentioned South Africa, Cameroon and Algeria as likely hotspots for the spread of the disease.
Markets.
The financial markets are suddenly in deep risk aversion again, on fear of a second wave of covid-19 pandemic and in reaction to a pessimistic US federal Reserve update. Investors booked gains and shifted out of risky assets. The number of Americans seeking unemployment benefits for the first time declined again last week, to around 1.5m, after a surprising 1.9m the week before. The labour market may be emerging from the depths of the covid-19 shock. The number of infections, however, passed 2m.
The FTSE 100 dropped 3.9% with similar drops across the continent. In the US the S&P 500 fell 5.89% and the Nasdaq dropped 5.27%. Asian stocks also dropped but the reaction was far more subdued.
The question is whether this correction marks the start of a new downward trend or is it just a blip in the gravity-defying stock market rally.
GDP down 20%
The UK Economy shrank by more than 20% in the first full month of lockdown as shops and production lines closed over April.
Activity in the UK contracted by 20.4% in April, the Office for National Statistics said, marking the single largest monthly drop since records began in 1997.
The Office for National Statistics (ONS) said the “historic” fall affected virtually all areas of activity.
The contraction is three times greater than the decline seen during the whole of the 2008 to 2009 economic downturn.
But analysts said April was likely to be the worst month, as the government began easing the lockdown in May.
The second largest fall was for March, when GDP fell a massive 5.8%.
Chancellor Rishi Sunak said: “In line with many other economies around the world, coronavirus is having a severe impact on our economy.
“The lifelines we’ve provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs – giving us the best chance of recovering quickly as the economy reopens.
“We’ve set out our plan to gradually and safely reopen the economy. Next week, more shops on the High Street will be able to open again as we start to get our lives a little bit more back to normal.”
Ministers braced for a wave of job cuts in the UK
Ministers fear a wave of job losses as large companies hit by the coronavirus crisis start to prepare redundancy notices.
The FT notes that Monday is the last day when companies cutting more than 100 jobs could start redundancy consultations if they want to avoid incurring at least some of the cost of furloughed staff from August.
Concerns are rising as Centrica announces 5,000 job cuts and Johnson Mathey, Heathrow Airport and Liberty Steel line up redundancies.
Meanwhile, the Fawcett Society claims COVID-19 could set back efforts to get more mothers into the workplace by 20 years.
CEO Sam Smethers said women are “easy to get rid of because they are on zero-hours or minimum-hours contracts”. The charity also said with more mothers having to give up work thousands of child care worker could face redundancy.
The Express notes figures from PwC showing 78% of those who have lost their jobs due to the coronavirus are women.
ONS figures reveal lockdown savings for UK households
Research by the Office for National Statistics (ONS) has found that during the financial year ending March 2019, UK households spent a weekly average of £182 on activities that they have largely been unable to pursue in recent months due to coronavirus restrictions.
This equates to 22% of a usual weekly budget of £831 which has been saved in each household since lockdown was implemented.
HMRC prepares to crack down on furlough abuse
In a piece on the cost of the government’s job retention scheme, the Times notes that a consultation on new powers in the Finance Bill to enable HMRC to go after those abusing the scheme ends today.
Over 2,000 reports of misuse of the furlough scheme have already been reported to HMRC. Dawn Register, partner in tax dispute resolution at BDO, said: “It is clear that HMRC is now gearing up to tackle incorrect and fraudulent claims for COVID-19 support payments.”
IoD survey reveals reduced investment intentions
The latest business survey by the Institute of Directors (IoD) reveals the COVID-19 crisis had driven down investment intentions by 11% among its members to a record low of -43%. Confidence in the economy overall rose slightly from -69% in April to -60%.
Tej Parikh, the IoD’s chief economist, commented: “The government must pull out the stops this summer. If it holds back too much ammo for later in the year, firms’ recoveries will be slowed.”
Separately, the IoD has also warned that half its member companies will be unable to trade if the two-metre social distancing rule remains in place.
SEISS claimants ‘could face significant tax bills’
Self-employed grant claimants may have to consider income tax bills for Self-Employment Income Support Scheme (SEISS) payments, with the government currently working on draft legislation which could see new rules on taxing coronavirus business support grants introduced.
Victoria Todd, head of the Low Incomes Tax Reform Group (LITRG), remarked: “Many claimants of SEISS grants might, understandably, use the money as soon as they get it, for example, to catch up on liabilities or to meet essential living costs – but they need to think now about budgeting for income tax and National Insurance on it.”
She went on: “We urge HMRC to do as much as they can to publicise that the grants are chargeable to income tax and National Insurance, to reduce the risk of people being surprised by higher-than-expected 2020/21 tax bills.”
BGF wants investors to support recovery fund
Stephen Welton, chief executive of the Business Growth Fund, is launching a new £15bn fund to support businesses reeling from the COVID-19 crisis.
Mr Welton is hoping to persuade pension funds, insurers and sovereign wealth funds to contribute cash which will be matched by the government.
This National Renewal Fund is likely to focus on companies providing essential supplies to the nation, such as manufacturers of personal protective equipment. He hopes the fund will be up and running by autumn to so it can step in when the furlough scheme ends.
Intu’s creditors asked for extra £12m funding
With shopping centre owner Intu Properties facing a possible administration, advisers from KPMG have asked for up to £12m in additional funding in order that Intu can continue running some of the centres should it fall into administration. A source said the request was designed to “focus minds” as I lenders decide whether or not to grant an 18-month standstill on Intu’s £4.5bn debt mountain.
Advisory experts back P2P lending sector to become mainstream investment class
Advisory experts have backed the peer-to-peer lending sector to become a mainstream investment class after COVID-19. Mark Turner, managing director, regulatory consulting at Duff & Phelps, said the pandemic presents an opportunity for the sector to prove itself. “I think there is the opportunity for P2P lending to be seen as a mature, mainstream asset class and especially if it can prove itself through this crisis as a sector that can manage risks effectively and generate good returns for investors, then I think the sector could really come of age,” he said. Similarly, Frank Wessely, partner at Quantuma, said that the P2P lending sector will be able to demonstrate it is a much more robust and secure asset class once it emerges from this pandemic, as long as there no further platform failures.
MKS maintains team spirit with online yoga and baking
BBC News reports on how Moore Kingston Smith (MKS) is keeping staff positive while they work from home because of the coronavirus outbreak. Every week, MKS’s accountants, lawyers and business advisers, along with their families, meet up on Zoom for a baking session and the company also lays on Zoom sessions for yoga and mindfulness. Managing Partner Maureen Penfold says the business’s main asset is its people and as an office-based company “social connectivity is vital to how we operate.”
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections