Pandemic support did not help – business news 26 July 2021
James Salmon, Operations Director.
Pandemic support did not help, HMRC pursues businesses for taxes on profits they haven’t made, Fearful consumers return to online shopping as online startups boom, Pingdemic hits growth and costs billions and more.
Many small firms say pandemic support did not help
A survey by the Federation of Small Businesses (FSB) reveals that a third of small firms found advice provided by the Government, accountants and trade associations designed to support their survival during the pandemic was not helpful.
Some 84% said they had sought out advice, but only 45% found it useful, raising questions about the effectiveness of public spending on business support.
Martin McTague, the FSB’s national vice-chairman, said business support and advice had never been more important. “We’ve seen huge numbers of small firms, almost half in fact, state that their business is still standing today thanks in part to the economic advice they managed to access,” he said. “While this is excellent news it means that almost half didn’t have the same levels of success.”
HMRC pursues businesses for taxes on profits they haven’t made
The Telegraph’s Harry Brennan reports that HMRC is billing freelancers and small businesses on the basis of how much they earned before the pandemic, meaning they will face paying far too much tax when bills arrive at the end of the month. RSM predicts that a fifth of small businesses could be caught out. Tram Abramov, chief executive and co-founder of TaxScouts, said: “After 16 months of financial uncertainty, the self-employed are expected to cough up the money to pay tax that they very probably just don’t have spare.” Sarah Coles of the investment firm Hargreaves Lansdown said: “There’s a ‘balancing payment’ next January, when you’ll be entitled to a refund for the amount you’ve overpaid, but there could be all sorts of cash-flow problems in the interim.”
Online shop start-ups boom
There has been a 237% surge in new businesses launching on eBay compared to last year as a generation of “pandemic start-ups” emerged during the Covid crisis. To help aspiring new sellers, eBay is launching a Small Business Power campaign.
Rob Hattrell, head of eBay Europe said: “Business will be paying the price of Covid for years to come, and it’s small businesses that will bear the brunt of this. It is now more important than ever to shop small and shop local – whether that is in-store or online – and to keep supporting and celebrating the power of small businesses.”
Fearful consumers return to online shopping
Data from Barclays show shoppers have been made wary of the Delta variant of COVID-19 leading them to return to online shopping. The bank’s latest Spend Trends report showed the rotation away from store spending to the internet started at the end of June. But Simon French, chief economist at Panmure Gordon, said the trend was likely to reverse: “I suspect it might tick back up in July and August while people work through this hump in infections and concern over the [delta variant] prevalence.”
Pingdemic and staff shortages weigh on growth
A surge in the number of people self-isolating and a rise in COVID-19 infection rates have led to a slowdown in the UK’s economic recovery, IHS Markit’s closely watched “flash” purchasing managers’ index indicates.
The index fell from 62.2 to 57.7 in July, with the pace of growth in the manufacturing and services sectors slowing considerably over the past month.
Chris Williamson, chief business economist at IHS Markit, said: “July saw the UK economy’s recent growth spurt stifled by rising infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages. It also cast a darkening shadow over the outlook.”
Pingdemic madness will cost economy £5bn
Economists are warning of the growing cost of Britain’s “pingdemic” as growth suffers from millions of staff being told to isolate after being pinged by the NHS Test and Trace app.
The Centre for Economics and Business Research (CEBR) said the cost of the pings could reach £4.6bn between “Freedom Day” on July 19th and August 16th, when double-jabbed people will be able to return to work after a negative PCR test.
Meanwhile, the CBI has said the Government’s plan to allow key industries in England to apply for named workers to be exempt from self-isolation is “undeliverable” and called for the August 16th date to be brought forward. John Foster, CBI director of policy, said a test-and-release scheme for those who have not been double-jabbed was also required.
Unions battle against plans to end pingdemic
Union leaders are encouraging key workers, including in transport and food, to avoid the self-isolation exemption set out by the Government and stay at home if told to do so, reports the Daily Telegraph. Steve Hedley, senior assistant general secretary of the RMT, claimed the Government “are panicking and trying to force our workers back to work, where it’s not safe” adding that he could not rule out taking legal action.
Businesses requiring vaccine passports face slew of lawsuits
Nearly a third of major businesses are considering requiring proof of vaccination in the workplace, surveys suggest. The British Chambers of Commerce found 31% of firms with more than 50 employees were considering the move, while a separate poll by Owl Labs found 23% of firms were planning to introduce the requirement.
Overall, 78% of respondents to the BCC survey said they had no plans to ask staff for proof of vaccination. More than three in four companies (76%) also expect to keep social distancing in place over the next year, while 54% said the same of face coverings.
But legal experts have warned that businesses who do enforce vaccine passports will likely face a slew of lawsuits on equality grounds. “It appears to be a straight breach and we cannot see how we could do this legally, as much as we might like to”
Worker loyalty is at a breaking point
The BBC reporets today on how the pandemic has changed peoples’ view of work, with many who were furloughed or forced to work from home reappraising their careers and the flexibility they require. Many are no longer prepared to return to the way of working that was conventional before the pandemic. If pressed to do exactly that, millions are choosing to quit instead. If businesses want to retain the loyal talent they need to stay competitive, experts argue they must listen to the needs of the labour market and adapt quickly.
Britain’s rate of growth fastest in 80 years
Upgraded forecasts from the EY ITEM Club indicate that the UK’s GDP is growing at 7.6% this year, compared to earlier predictions of 6.8%. This would be the fastest rate of growth since 1941. The think tank has also revised its 2022 forecast to 6.5% GDP growth next year, up from the 5% previously expected.
Martin Beck, senior economic adviser, said the vaccine rollout had “played a key role in bringing forward the reopening of the economy” while the furlough scheme and adaptive businesses have meant the “jobs market is emerging from the pandemic in a remarkably little-damaged state.” Mr Beck notes that consumers have huge pent up spending power but there is no guarantee they will spend these savings, while rising prices could also constrain spending power.
AstraZeneca
AstraZeneca said results from a recent study show its vaccine is “highly effective” after one dose against severe disease or hospitalisation caused by all major variants of covid-19. The vaccine was 82% effective against hospitalisation and death caused by the Beta and Gamma strains, real-world data from Canada showed. Effectiveness rises to 87% against the Delta variant and 90% against the Alpha variant.
Beazley
Beazley announced a 22% jump in profit for the period ending 20 June 2021. Profit before tax was up at $167.3m, compared $13.8m for the same period last year.Return on equity for the year was also up of 15%, compared to 1% as of 30 June 2020.Gross premiums written increased by 22% to $2.035m, compared to $1.663.9m the year before.
Premier Foods
Premier Foods announced a 6.3% sales bump up compared to two years ago.Branded sales were up 9.35%. Total grocery sales for Q1 were up at £133.2m, compared with £162.1m in Q1 2020.
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