England’s lockdown rules to end next week – business news 13 July 2021.
James Salmon, Operations Director.
England’s lockdown rules to end next week. Business call for clarity on Covid guidelines. Recovery boosts firms’ confidence. Retail sector sees fastest quarterly growth on record. Businesses overpaying corporation tax, WFH, Brexit, Infrastructure, Manufacturers and more.
England’s lockdown rules to end next week
England will remove many of its remaining lockdown restrictions on July 19, although some guidance will remain. There will no longer be any limits on how many people can meet and the 1m-plus distancing rule will be removed. Nightclubs will also be allowed to reopen and capacity limits will be removed for all venues and events.
Bus and train firms will be left to decide whether to require masks on their vehicles. They will no longer be legally mandatory. Boris Johnson said: “We expect and recommend that people wear a face covering in crowded and enclosed spaces where you come into contact with those you don’t normally meet, such as on public transport.”
Asked if Monday’s rule changes were irreversible, as has been repeatedly stated, Mr Johnson said he hoped they were but “we must rule nothing out”. And in the Commons, Mr Javid said the government will “have a review” in September “to make sure that we’re properly set up for autumn and for winter”.
Confirming that the restrictions will be lifted, Prime Minister Boris Johnson stressed the importance of proceeding with caution, warning “this pandemic is not over”. He told a Downing Street press conference: “We cannot simply revert instantly … to life as it was before Covid”.
Health Secretary Sajid Javid said people should act with “personal responsibility”, saying face coverings were still “expected and recommended” in crowded indoor areas and suggesting people should “try to meet people outside where possible”.
As part of the lifting of restrictions, the requirement to self-isolate if contacted by NHS Test and Trace will remain in place until August 16, when it will be relaxed for people who are fully vaccinated and for the under-18s.
Doctors are warning that another spike in cases will overburden an already stressed National Health Service that’s struggling to clear a large backlog of other operations, while economists expect there to be a drop in consumer confidence in the coming weeks due to the greater perceived threat to public safety.
Johnson is pushing ahead with dropping virus measures even as a new covid wave rises. Daily hospital admissions are expected to hit 1,000-2,000 per day at a peak in August and there are expected to be as many as 200 daily deaths, according to modeling by the U.K.’s Scientific Advisory Group for Emergencies (SAGE).
Business call for clarity on Covid guidelines
While business groups have welcomed confirmation that England’s lockdown rules will be lifted on July 19, there have been calls for greater clarity over guidelines that will remain in place, with ministers recommending that people cover their faces in crowded areas and encouraging event organisers to use vaccine passports.
Claire Walker, co-executive director of the British Chambers of Commerce, said firms “still don’t have the full picture they desperately need to properly plan for unlocking”, pointing to “confusing and sometimes contradictory advice” from official sources.
Mike Cherry, national chair of the Federation of Small Businesses, said the easing of restrictions “will give small businesses the hope they’ve been waiting for” but warned: “We cannot allow removing legal guidance to create a free for all, with any voluntary guidance ignored, which is why it is vital that clarity around the new state of play is given immediately.”
The Confederation of British Industry’s chief UK policy director Matthew Fell believes the Government has set out plans that are “practical, pragmatic and easy to follow”, adding that it is “now mission critical that the Government, with the support of business, does all it can to build confidence in the reopening.”
Recovery boosts firms’ confidence
The recovery in business activity following the pandemic has boosted employers’ confidence in hiring to its highest level but there is increased concern over inflation, according to the Accenture/IHS Markit UK business outlook study.
The report shows that 67% of private sector firms in the UK expect an increase in business activity over the next 12 months, compared to 11% anticipating a reduction.
It was found that a net balance of 41% of companies expect to hire more staff in the coming year, while capital expenditure and research and development plans have risen to the highest levels in six years.
Rachel Barton, strategy and consulting lead at Accenture, commented: “Despite continued uncertainty, it is hugely encouraging that confidence remains high amongst British businesses.” Despite optimism among many firms, the report also saw concerns over rising workforce costs and inflation hit a record high
Office return can boost ambitious Gen Z
Former Conservative leader William Hague considers what the lifting of the Government’s work from home guidance means for workers, saying that in a time when “millions of people are very attached to the idea of not coming to the office very much”, those who do opt to return to the office may benefit, pointing to a scenario where “the omnipresent young worker will be promoted ahead of contemporaries who elected to work mainly from home.”
He highlights that the world of work has changed amid the coronavirus crisis, with it found that “many international trips are not necessary, that many jobs can be done more flexibly and that virtual meetings have many uses”, adding that work “will not be the same and nor should it be”. Mr Hague warns mid-career employees that competitive, ambitious Generation Z staff “will not be short of single-mindedness and stamina” and are keen to get back to work.
Retail sector sees fastest quarterly growth on record
Analysis of consumer spending by the British Retail Consortium (BRC) and KPMG shows that the retail sector has seen the fastest quarterly growth on record for shopping in stores and online.
While retail sales were 13.1% higher in June than in the same month two years ago, the total for Q2 2021 was 10.4% up on the same three-month period of 2019. The analysis compares this year to 2019 as 2020’s figures were distorted by a downturn caused by the early stages of the pandemic.
Helen Dickinson, chief executive of the BRC, said: “The second quarter of 2021 saw exceptional growth as the gradual unlocking of the UK economy encouraged a release of pent-up demand built up over previous lockdowns”. Elsewhere, consumer spending figures from Barclaycard show that activity in June was 11.1% higher than in the same month of 2019. Barclaycard said spending on fuel, hotels, resorts and accommodation all grew for the first time since the pandemic began, while face- to-face retail grew 9.7%.
Think-tank urges tax breaks for manufacturing sector
Conservative MPs in the so-called “red wall” are backing calls for Boris Johnson to offer tax breaks for manufacturing as part of levelling up plans. A report from think-tank Onward urges the Prime Minister to set out a national plan for manufacturing, including tax breaks for factories and extra investment into technology. Onward’s Making A Comeback report, which is backed by 65 Conservative MPs, has called on ministers to set out tax incentives for capital investment, among other proposals.
Businesses overpaying corporation tax up by 26%
Businesses claimed back a record £11.5bn in overpaid corporation tax from HMRC last year, a 26% increase on the £9.1bn recorded the year before, according to analysis by UHY Hacker Young. The report suggests that refunds are expected to rise even further in the coming months, with many businesses not yet having filed tax returns covering the full lockdown period. With pandemic-related restrictions having hit trade, many firms may be facing big losses and more businesses than usual will have overpaid corporation tax.
UHY Hacker Young said it is “extremely likely” that the £11.5bn of refunded tax is merely “the tip of the iceberg”. Nikhil Oza, corporate tax director at the firm, said: “Businesses are already overpaying billions in corporation tax under HMRC’s current collection system. Accounting for Covid-related losses on top of this will only see refunds jump even further”.
Firms warn of Brexit’s impact on trading
A survey conducted for i by Blick Rothenberg has found that more than eight in 10 business owners believe Brexit will have a long-term negative impact on trading, with almost half saying Britain’s departure from the bloc has hit business.
While 80% of respondents said the pandemic has hit firms harder than Brexit, the poll suggests that ending free trade with the EU will have a more detrimental effect in the longer term.
More than half of businesses said revenue had either declined or strongly declined due to Brexit, while almost 45% said they experienced a loss or a significant loss in six months since the UK left the EU.
The survey also saw 81% of firms say the Government should allow more EU citizens to live and work in the UK. The report notes that more than 80% of responders believe that the UK economy will shrink due to the Brexit deal.
Alex Altmann of Blick Rothenberg said complicated new customs rules and new VAT rules have had an impact on businesses, while operational challenges, like new administrative burdens, additional taxes and duties and difficulties recruiting staff, “were also considered some of the main disrupters.”
Businesses want more investment in infrastructure
A poll has found that almost 70% of middle market business leaders believe more investment needs to be made in the UK’s infrastructure. RSM found that a lack of investment has seen 80% of business leaders investing directly into their own infrastructure. Nearly a third said accessing finance is proving difficult.
PM urged to rethink CGT for innovators
With Boris Johnson reportedly preparing a speech on relaunching the post-pandemic economy, Matthew Lynn in the Telegraph proposes a number of measures the Prime Minister could roll out. These include an innovator’s rate of capital gains tax, with Mr Lynn saying the lower rate of CGT for entrepreneurs “doesn’t single out the real stars” and arguing that the rate should be cut to zero for “genuinely innovative companies” in a bid to make the UK “the most tax-friendly country for new enterprises in the world”. He also says regional corporation taxes could boost certain areas, saying a 15% rate of corporation tax for Wales and Northern Ireland could attract companies to regions where productivity has been shown to be “dismal”.
EU suspends digital tax plan
The EU says it will suspend its plans to tax large online firms as nations seek to agree a minimum corporate tax rate of 15%. With G20 finance ministers agreeing to support the global effort to set a rate – a proposal that will go before G20 leaders in October – the EU said pulling back on its own plan would make it easier to achieve “the last mile” of the international deal, with European Commission spokesman Daniel Ferrie saying: “We have decided to put on hold our work on our new digital levy”. Ireland declared it would stick to its lower tax level of 12.5%, with deputy Prime Minister Leo Varadkar saying the reform plan was about “big countries trying to get a bigger share of the pie”.
US Treasury secretary Janet Yellen yesterday reiterated a call for all 27 EU countries to join the global deal, saying: “We need to put an end to corporations shifting capital income to low tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their fair share”.
Firms urged to remember pressures consumers face
Karim Haji, head of financial services at KPMG, says that while the Bank of England’s Financial Stability Report “will no doubt applaud the crucial role played by UK financial services in guiding our economy through the pandemic … to think we are out of the woods is an error”. He notes that many businesses and individuals are left facing deferred debt and taxation payments as the country emerges from lockdown, saying there will be “considerable strains on the purses of consumers and businesses alike.”. Mr Haji says the report “serves as a timely reminder for firms to consider the pressures on customers at a time when pandemic support mechanisms are being wound down”, adding that much work has been done – and continues to be done – to ensure the industry “tackles the challenges customers have faced”.
Building an ethical business
Christian Koch considers how, at a time when the demand for businesses to be ethical is rising, firms can ensure that sustainability does not hurt their financial stability. Writing for City A.M., he suggests accountancy “isn’t immune” when it comes to criticism over ethical issues, highlighting that environmental lawyers ClientEarth have “publicly harangued” the Big Four for failing to address the climate crisis in their auditing. Noting that the Financial Reporting Council recently launched a review into whether auditors should reflect the financial risks of the climate crisis in their accounts, Mr Koch says chartered accountants “have a crucial role to play in ensuring businesses become more ethical”.
House sales slip as stamp duty holiday winds down
Analysis by estate agents Knight Frank shows that house sales were down 60% on the five year average in the first week of July, with this coinciding with the tapering of the stamp duty holiday. As of July 1, the tax-free rate fell from £500,000 to £250,00, with the rate set to return to the pre-pandemic £125,000 in October. The fall recorded in the opening week of July follows a bumper June, with the number of property transactions last month set to be the highest on record. The analysis also shows that demand remains strong, with the number of new prospective buyers registering in the first week of July 31% higher than the five-year average for that week. Considering the climate for the housing market, Knight Frank’s James Cleland said: “It actually feels like we’re moving towards a better place as a rebalancing of the market is underway.”
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