Small and medium business owners have voiced fears they won’t survive the second wave of Covid-19, as cases continue to rise in the UK. Public Health England reported the number of daily cases across the nation had rocketed to a new high of 6,634 on 24th September.
This surpassed the previous daily high of 6,201 on 1st May, at the height of the first wave of the pandemic. The total number of cases has now exceeded 416,000 – including 41,942 deaths to date.
More regions across the UK are being subject to local lockdowns in an attempt to stop the spread of the killer virus.
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Chief Medical Officer for England Chris Whitty advised the coronavirus alert level should increase from three to four, meaning the transmission rate was now “high or rising exponentially”. Without urgent action, a record 50,000 new coronavirus cases could be recorded each day by mid-October if the figure continues rising at its current rate.
The whole of the country is now on high alert, as more areas are added continually to the lockdown list. The government aims to bring the R-rate back to below one from its current estimated rate of 1.5, while minimising the impact on the economy and society at the same time.
Following an emergency meeting of COBRA, headed by Prime Minister Boris Johnson, a joint statement on 25th September from the UK Government, Scottish Government, Northern Ireland Executive and Welsh Government, stated: “Cases are rising rapidly and we must take action to stop an exponential increase that could overwhelm our health services.”
What is the impact of Covid-19 on businesses?
The pandemic has already had a disastrous effect on the UK’s 5.9 million SMEs, with a reported 234,000 closing down permanently since the lockdown began in March. According to a new study by insurer Simply Business, the surviving small and medium enterprises have each lost up to £17,000 already.
The second wave of Covid-19 could bring the total losses suffered by SMEs up to a record £69 billion, according to figures quoted by Yahoo Finance. Of the firms who have survived to date, 25% fear they are at risk of imminent closure.
More than one-third of the surviving SMEs are relying on short-term loans and borrowing cash from family and friends, according to the research by Simply Business. A little over half (53%) have been unable to access government support, for various reasons, including not understanding the application process, or failing to meet the eligibility criteria.
How are businesses adapting to survive the pandemic?
Alongside the crisis has come improved innovation, with 20% of small businesses adopting new technology, including contactless payments, messaging apps and online delivery services.
Retailers have introduced safety measures in bricks-and-mortar stores, such as social distancing, limiting the number of customers in the shop at any one time, separate entrances and exits, one-way systems, shoppers wearing masks and stringent in-store cleaning regimes.
In offices, safety measures have included risk assessment, consultations between employers and employees to discuss how to implement social distancing, modifying workstations to avoid sitting face-to-face, amending the use of common space, staggered work shifts, splitting teams up and more.
What are the latest government guidelines for businesses?
The government has been criticised for giving “confusing” advice in recent weeks. Ministers have been encouraging a gradual return to work since May, with the ongoing winding down of the furlough scheme, guaranteeing 80% of each employees’ wage would be paid.
From 1st July, companies were encouraged to put the emphasis on a flexible return to work, as long as safety measures were applied. By the end of August, a positive “return to work” campaign was launched and employers began adapting to the “new normal” in the workplace.
According to a report by the BBC, during September, the government would further promote returning to work, with Transport Secretary Grant Shapps saying in an interview, “For a lot of people, it will be the right time.”
However, less than a month later, on 22nd September, the rise in cases has led to a U-turn by the government, with ministers now advising people to work from home again. Cabinet Office Minister Michael Gove told BBC Breakfast, “If people can work from home, they should.”
However, he added if employees couldn’t do their job without being in the workplace, they should continue to go in, but the advice was work from home when possible.
Is more government help available for businesses?
The Coronavirus Job Retention Scheme, commonly known as the furlough scheme, is due to end on 31st October, after helping 10 million workers retain their jobs to date. The government announced a new Job Support Scheme would start on 1st November to replace the furlough scheme. It will last six months and is designed to protect jobs in sectors affected by reduced demand due to the pandemic.
Businesses will pay staff for the hours they actually work, which may be considerably less than their contracted hours. Employees will receive extra money because the cost of the regular hours not worked will be divided between the government and the employer. However, the government’s contribution is capped at £697.92 a month and the employees will usually suffer a wage reduction.
The government also launched a scheme permitting the deferral of VAT payments and enabled employers to claim back Statutory Sick Pay paid to staff due to the virus. The Coronavirus Small Business Grant Fund, the Retail, Hospitality and Leisure Grant Fund and other money pots were set up to help eligible businesses.
Will businesses be able to cope with increased restrictions?
Despite government help, economists are predicting a further rise in unemployment by the end of the year. According to the Office for National Statistics, the most recent unemployment rate, for May to July, is 4.1% for people aged 16 and over – an increase from 3.9% on the previous quarter. This equates to around 1.4 million people unemployed.
However, the Bank of England has forecast unemployment could rise to 7.5% or possibly higher this winter. The worst-hit sectors are those suffering a big decrease in customers, including retail and hospitality.
While a report by Sage states 86% of SMEs fears a second wave will negatively impact their business, they’re relying on preparation and digitisation to survive the crisis. The study shows 40% have built stronger relationships with customers, 36% have become more cost-effective in their operating practices and 31% have adopted new technology to improve their digital capabilities. There has been a six-fold increase in online transactions since the lockdown first began.
Two to three years of technology improvements were completed in just two months as businesses battled to adapt quickly to the changing trading climate.