IMF anticipates ‘vaccine-powered’ rise in economic activity

With vaccines against Covid-19 expected to be widely available by the summer, the International Monetary Fund (IMF) is anticipating a pick-up in global economic activity later this year.

Its latest growth forecast projects that the global economy will grow by 5.5% in 2021 and 4.2% in 2022.

This year’s forecast has been lifted by 0.3 percentage points, reflecting expectations of a “vaccine-powered” pick-up in global economic activity and additional policy support in certain large economies including the United States and Japan.

The projected recovery in growth follows a “severe collapse” triggered by the spread of coronavirus in 2020. The global growth contraction for 2020 is estimated at -3.5%.

Activity levels in the US and Japan are expected to return to end-2019 levels in the second half of 2021, while in the UK and the euro area activity is expected to remain below end-2019 levels into 2022.

“The wide divergence reflects to an important extent differences across countries in behavioural and public health responses to infections, flexibility and adaptability of economic activity to low mobility, pre-existing trends, and structural rigidities entering the crisis,” the IMF explained.

The UK economy is expected to grow by 4.5% this year, followed by growth of 5.0% in 2022. The UK’s estimated 10% contraction in 2020 was the largest of the G7 group of advanced economies.

Working During a Pandemic

When there is a pandemic going on, you may want to take extra steps to keep yourself and others safe, while still allowing yourself to continue working. Whether this involves still travelling to your place of work, or working from home, will be down to the discretion of your employer, as well as the needs of the company.

Even with the pandemic, people still need a means of earning money and paying their bills. To make things easier, both companies and individuals can work together to improve the cleanliness of offices and try to make working conditions as sanitary as possible. This may be even more vital should your role also involve physically dealing with members of the public.

Staying Safe

When a pandemic like covid-19 occurs, there may be additional safety measures that you should put in place. Some of these may be mandated, while others will be advised. Regardless of your thoughts on the severity of the situation, it is best to err on the side of caution. Even the most fashion-conscious individual can use branded covid protective masks to help keep themselves and others safe. This can help to prevent the spread of germs through coughing and sneezing. Companies themselves may also wish to consider purchasing masks which hold their logo, as part of their measures to keep employees safe and also advertise who they are.

Washing Hands

While keeping your hands clean and practising good hygiene is important on any average day, it is far more imperative when there is a pandemic going on. Considering the number of surfaces and items that you and your colleagues may touch during the average eight hour working day, there is a clear risk of germ transference. By washing your hands at regular intervals, as opposed to only when you have used the toilet, ensuring that the scrubbing process is achieved for a minimum of twenty seconds, you may be able to help prevent the spread of covid, as well as other viruses and bacteria that may be present, such as the common cold.

Remote Working

One option made available to some employees throughout the pandemic is remote working. So long as it is feasible to do so, you may be allowed to work from the comfort and safety of your own home. This may require you to take company property, such as laptops, home with you.

To make remote working as easy as possible, and to avoid disruption, it can be beneficial to set up your workspace in a seldom-used room in the house. If you have a spare room or home office, this may be ideal. Getting into a good routine, much as you would when physically present at work, can also help you to stay on track with your work.

Just because the world has changed around you, that does not mean that you cannot continue with some of your usual tasks, including those related to your employment. By following the health and safety guidelines set out by both the government and your employer, you may be able to increase your safety.

Record number of small firms could close, warns FSB

At least 250,000 small businesses in the UK are set to close without further help, the Federation of Small Businesses (FSB) has warned.

Its latest quarterly survey showed that confidence among small business owners is at the second-lowest level in the report’s ten-year history, second only to that recorded in March 2020. The majority of those surveyed (80%) do not expect their performance to improve over the next three months.

Worryingly, a record number of small business owners surveyed at the end of December 2020 said that they were planning to close their firms over the coming 12 months, putting the UK on course to lose more than a quarter of a million businesses.

Just under 5% of the 1,400 firms surveyed for the study said they expect to close this year. This figure does not include those hoping to survive despite having frozen their operations, reduced headcounts or taken on significant debt.

“The development of business support measures has not kept pace with intensifying restrictions,” said FSB national chairman Mike Cherry. “As a result, we risk losing hundreds of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods. A record number say they plan to close over the next 12 months, and they were saying that even before news of the latest lockdown came through.

“At the outset of the first national lockdown, the UK Government was bold. The support mechanisms put in place weren’t perfect, but they were an exceptionally good starting point. That’s why it’s so disappointing that it’s met this second lockdown with a whimper.

“There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go. But this Government needs to realise that the small business community is much bigger than these three sectors.”

Firms in supply chains and those without commercial premises are among those still “left out in the cold”, Cherry added.

The FSB has presented the Treasury with proposals on how to address the current gaps in support.

In a statement quoted by BBC News, the Treasury said that no changes were planned at present, but added: “Our support schemes are designed to get help to those who need it most whilst protecting the taxpayer from fraud, but of course we keep everything under review and are always open to further ideas.”

UK Govt announces £4.6bn in new lockdown grants

Retail, hospitality and leisure businesses in the UK will receive new grants to help them survive the latest Covid-19 lockdown, Chancellor Rishi Sunak said on Tuesday.

It comes after the UK Government announced that these business will have to close again in order to help control the spread of coronavirus.

England’s lockdown rules are due to be reviewed on 15 February while Scotland’s will be reviewed at the end of January.

The one-off top-up grants are expected to benefit more than 600,000 business properties.

Closed businesses in the retail, hospitality and leisure sectors with a rateable value of £15,000 or under will be eligible to receive a grant of £4,000. Those with a rateable value between £15,000 and £51,000 can apply for a £6,000 grant, and £9,000 will be available for business properties with a rateable value of more than £51,000.

As business support is a devolved policy, the UK Government will provide £375m in additional funding to the Scottish Government, £227m to the Welsh Government and £127m to the Northern Ireland Executive.

A further £594m is being set aside to support businesses in other sectors that might be affected by the restrictions. This money will be made available by local authorities.

In total, the measures are worth £4.6bn across the UK.

Fewer redundancies planned after furlough extension

There was a fall in the number of jobs at risk of redundancy in November, despite a second lockdown in England and other restrictions in Wales and Scotland.

Figures released to the BBC in response to a freedom of information request show that employers in Britain were preparing to make 36,700 redundancies last month. That’s down from a peak of 156,000 in June and is the lowest number of planned redundancies since lockdown restrictions were introduced in March.

Under legislation that applies in England, Scotland and Wales, employers must notify the Insolvency Service if they plan to make 20 or more workers redundant in any single “establishment” using a form called HR1.

The figures suggest that Chancellor Rishi Sunak’s decision to extend the furlough scheme until the end of April 2021 has helped to protect jobs.

Sainsbury’s, Gregg’s, John Lewis, Edinburgh Woollen Mill and Jaeger and were among the companies that announced job cuts in November.

However, around 25,000 more jobs could be lost with the failure of big retailers Arcadia and Debenhams, if the two groups are unable to find buyers. Topshop owner Arcadia fell into administration at the end of November and the news was swiftly followed by the end of last-ditch efforts to rescue department store chain Debenhams, which had been in administration since April.

For now, the November figures provide “encouragement that there will be a steady trickle, rather than a tsunami, of job losses over the next few months,” said Ruth Gregory, senior UK economist at consultancy Capital Economics.

Offices set for business rates write-off after appeal

UK businesses could save almost £500m after an interim ruling on business rate rebates.

When restrictions were announced in March 2020 to help stop the spread of Covid-19, Chancellor Rishi Sunak said that retail, leisure and hospitality businesses in England would not have to pay business rates for the 2020 to 2021 tax year.

Supermarkets were also granted business rates relief, although Tesco, Morrisons, Sainsbury’s, Asda, Aldi and Lidl have agreed to repay a total of £1.9bn.

Offices that stood empty as workers were urged to work from home were still expected to pay their full rate.

Around 150,000 businesses appealed, citing a material change in circumstances, an adviser close to the negotiations told City A.M.

The Valuation Office Agency has now agreed to write off a combined £481m in business rates. Offices that appealed their bills can have a 25% rebate, the agency said.

“Understanding the impact of the ongoing pandemic on rateable values is a complex legal and valuation issue,” a spokeswoman for the Valuation Office Agency told BBC News. “We are working to resolve these cases as quickly and efficiently as we can.”

Border closure could lead to gaps on supermarket shelves

UK supermarkets have warned that gaps may start to appear on shelves within days after France closed its borders to UK freight traffic.

The blanket ban on arrivals from the UK came on Sunday amid concern at the spread of a new variant of coronavirus. Several other countries have also banned arrivals from the UK.

Around 10,000 lorries a day usually travel between Dover and Calais at peak periods such as Christmas, largely bringing in fresh produce.

France has not banned lorries from travelling into the UK from France, but there is a risk that European hauliers will not want to enter the country if they cannot return home.

Sainsbury’s said that everything needed for Christmas dinner is already in the country.

“We are also sourcing everything we can from the UK and looking into alternative transport for product sourced from Europe,” a spokesman for the supermarket said.

But he added: “If nothing changes, we will start to see gaps over the coming days on lettuce, some salad leaves, cauliflowers, broccoli and citrus fruit — all of which are imported from the Continent at this time of year.”

Food and Drink Federation chief executive Ian Wright said the ban on freight traffic from the UK to France had the “potential to cause serious disruption to UK Christmas fresh food supplies — and exports of UK food and drink”.

He urged the UK government to “persuade the French government to exempt accompanied freight from its ban” as a matter of urgency.

France’s transport minister has said that measures are being planned to “ensure that movement from the UK can resume”.

Debenhams set to close all stores

Last-ditch efforts to save Debenhams have failed.

The department store chain said on Tuesday that it was starting the liquidation process after the last remaining bidder, JD Sports, withdrew from talks.

The 242-year-old retailer had been in administration since April and had already cut about 6,500 jobs due to cost-cutting measures. It currently employs 12,000 people across 124 stores.

If the administrators are unable to reach a final deal for all or parts of the business over the coming months, all jobs at Debenhams will be lost.

Debenhams will continue to trade while the liquidation process is ongoing. Restructuring firm Hilco will start going into stores on Wednesday to begin clearing stock, BBC News reported.

Geoff Rowley of FRP Advisory, joint administrator to Debenhams, said the company was unable to reach a viable rescue deal due to the “extremely challenging” economic landscape, coupled with the uncertainty facing the UK retail industry.

The news came just hours after Arcadia Group, owner of Topshop, Dorothy Perkins and Burton, fell into administration, putting 13,000 jobs at risk.

Arcadia operates 444 stores in the UK and 22 overseas.

Uncertainty over furlough scheme ‘cost jobs’

Employers in Britain were preparing to make 51,000 redundancies in October, new figures reveal.

It came amid rapidly rising levels of Covid-19 infections and uncertainty over changes to job support schemes.

The UK Government’s furlough scheme, paying 80% of an employee’s wages, was due to end on 31 October. On the final day of the scheme it was extended for another month, and then on 5 November it was extended until the end of March.

Figures released to the BBC in response to a freedom of information request show that during October a total of 842 employers told the Government of plans to cut 20 or more jobs.

Under legislation that applies in England, Scotland and Wales, employers must notify the Insolvency Service if they plan to make 20 or more workers redundant in any single “establishment” using a form called HR1.

“These figures show us that many businesses were planning lots of job losses back in October because they were very worried and concerned about the evolving economic situation, and how that would unfold over the winter,” Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, told BBC News.

McDonald added that Chancellor Rishi Sunak’s “messy and last-minute approach” to announcements about job support “contributed to the lack of certainty and unfortunately will have cost jobs”.

Although the October figures are almost two-and-a-half times the level seen in October last year, they are lower than those recorded in June, July and September.

Long-term impact of no-deal Brexit ‘worse than Covid-19’

Leaving the European Union without a trade deal would have a bigger impact on the UK economy in the long term than the damage caused by Covid-19, the Bank of England governor has warned.

Speaking to MPs on the Treasury Select Committee, Andrew Bailey said that a no-deal Brexit would cause disruption to cross-border trade and damage the goodwill needed to build a future economic partnership.

If the UK fails to agree to a deal before the Brexit transition period expires at the end of December it will revert to World Trade Organisation tariffs and trade barriers with its biggest trading bloc.

The central bank governor acknowledged that the fallout from the pandemic and the second national lockdown in England was having a greater short-term impact on the economy.

But he argued that in the longer term, the economic cost of leaving without a deal would be larger than the cost of Covid.

“It takes a much longer period of time for what I call the real side of the economy to adjust to the change in openness and adjust to the change in the profile of trade,” Bailey said.

In September, an analysis by the London School of Economics and UK in a Changing Europe concluded that the long-term economic impact of a no-deal Brexit could be two or three times as large as that of the pandemic.