By Euro Weekly News Media • 19 March 2021 • 15:46
Image by Benedikt Geyer from Pixabay
A new report spearheaded by the London School of Business has shown that the economic fallout of the pandemic is far from over.
According to the report, nearly 1 million UK businesses are at risk of imminent bankruptcy and closure. Millions of jobs are on the line if these businesses fail. The report also states that a major collapse of the economy would be inevitable if that should occur.
But it’s not all doom and gloom.
This article will look at the current economic climate and how small UK businesses are suffering, but will also focus on some of the solutions that are being recommended for the government’s upcoming budget for 2021. It will also address some of the strategies business owners can do to help themselves while they await further support from the government.
The main issue at play is that several British lenders have decided to pull out of support programs that were set up to support small businesses. If the government doesn’t step in to expand existing programs or create new ones, the report warns, 15% of UK businesses are at risk of becoming closed permanently.
In other words, more than one in seven businesses across the country could close their doors for good if something isn’t done right away with the prediction of UK business closures being three times high in the first quarter of 2021 compared to the same quarter two years ago.
Alongside this news, small UK businesses are also having to prepare for new tax reforms for the upcoming tax season in April, with an increase in the corporate tax being predicted.
The recommendations being given to anxious business owners for this difficult time are to keep on top of news and information regarding their situation, to ensure that their accounts are in order, and to implement the appropriate tools that offer support and assistance in managing taxes and payments.
According to a report regarding the problem of UK business closures led by the LSE’s Centre for Economic Performance and the Alliance for Full Employment, states that micro-businesses (firms with fewer than 10 employees) are at the greatest risk of closing down within the next few months. There are almost 400,000 registered businesses in the United Kingdom that fall into the at-risk group, and approximately 906,000 firms in total face the specter of bankruptcy and closure.
At-risk registered businesses alone employ nearly 2 million people. However, when all businesses at-risk are considered, 2.5 million jobs (equal to roughly 9% of all employment) are on the line. Should that many people lose their jobs, the impact on the nation’s economy will be dire.
However, the report also offers several recommendations for addressing the problem. In particular, the report suggests that the worst possible outcomes could be avoided by making the most of the collective power of the public and private sectors. However, thus far, no action has been taken to address the looming deadline that could force the closure of hundreds of thousands of businesses across the UK.
The authors of the report suggest extending loan subsidies well into 2021, which could alleviate financial pressure on many businesses. With many small businesses partially or fully shuttered due to the pandemic, the upcoming Budget 2021 could be the final straw for them as they continue to struggle with loan and tax payments. Extending these subsidies would be an effective way to support them during these struggles so they can re-open once the crisis is over.
The report also recommends new collaborations between the government and banks. Banks are encouraged to support the administration of government lending and streamline the process for businesses that are looking for assistance.
It also recommends restructuring debt over the ensuing recovery period, which might include trading government loans for equity stakes. These and other measures are complex, but they are precisely the types of programs that could be suggested in the upcoming budget to help keep existing businesses afloat.
As small business owners hold their breath and wait for the upcoming changes, there are things they can do to try to weather the storm and alleviate some of the stress and pressure.
First, of course, business owners should make sure they are receiving all of the aid for which they are qualified. Even if a business is receiving the full amount of aid that it qualifies for, that assistance may be expiring in just a month or two – and even if it is extended, recovery will be an uphill battle for many. Therefore, it’s more important than ever for businesses to do what they can to grow and expand independently rather than relying on government handouts that have rules and regulations that are risky, unstable, and forever changing.
Thanks to the pandemic, more people are staying home and are online for everything from working to studying to shopping. Now is the time to meet clients and customers where they are and develop a strong digital presence.
As the quality of websites grows, so do consumer demands and expectations. People expect convenience, speed, and responsiveness. Fortunately, the ability to create a high quality and responsive website is much easier now than it ever has been before thanks to the wide variety of user intuitive website builders that are now available.
According to London-based front end web developer Alex Williams of Hosting Data, creating a business website is also significantly cheaper today than in years prior as well, stating “you can build and maintain your website for less than $50 a month depending on which website building software you use and what plan you choose…you can also easily use a free trial or a website builder that offers a free package. This is a great option if you’re only needing a website builder for a short amount of time or your business is just taking off.”
Keeping on top of these trends and expectations could ultimately mean the difference between a sale and a lost customer. Many brick and mortar stores have already established themselves online, but running an audit or revamping digital assets to align with trends and consumer demands can give businesses that extra edge they need right now.
Facing little support from lenders, UK business owners will be on pins in the weeks to come as they await news about government assistance programs. For now, though, it’s important for business owners to keep their heads above water and to do whatever they can to adapt to these rapidly changing circumstances. Taking responsibility and action in ensuring a solid digital presence can keep owners feeling encouraged and in control during such unstable times.
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