‘Freedom Day’ delayed by four weeks – business leaders react

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Most coronavirus rules will remain in place in England for another four weeks after the planned 21 June unlocking was delayed.

Step 4 will be delayed by up to four weeks and the vaccination programme accelerated to respond to the rapid spread of the Delta variant.

By 19 July, all adults will have been offered a first dose and around two thirds of all adults will have been offered two doses of the vaccine. Data suggests that the Delta variant is between 40% and 80% more transmissible than the Alpha variant and is rapidly driving up case numbers.

There are currently around 8,000 cases a day, the highest since the end of February, and these are increasing by around 64% each week. Hospitalisations are starting to rise, with the average number of people admitted to hospital increasing in England by 50% per week, and 61% per week in the North West.

Delay to roadmap risks a dangerous detour for jobs

  • Early payroll estimates for May show the number of employees has risen for the sixth consecutive month, up 197,000, but it’s still down 553,000 from before the pandemic.
  • The employment rate for February-April was 75.2%, 1.4 percentage points down from before the pandemic, but 0.2 percentage points higher than the previous quarter.
  • The unemployment rate was 4.7%, 0.8 percentage points up from the pre-pandemic level but 0.3 percentage points lower than the previous quarter.
  • The redundancy rate fell by a record 7.1 per thousand over the three months, to 4 per thousand. It is now around the pre-pandemic level.
  • As lockdown measures relaxed, the number of hours worked rose 7.2 million from the previous quarter.

Sarah Coles, personal finance analyst, Hargreaves Lansdown shared her thoughts.

Jobs are heading in the right direction, but after the roadmap to reopening has been delayed for four weeks, we can’t rule out a dangerous detour as we head into the summer.

Unemployment is down, employment is up, the redundancy rate has fallen by a record amount, and vacancies soared in April. Meanwhile, early indications for May hold out the hope of more good news to come.

But pushing the full reopening of the economy back four weeks could be a horrible blow for the jobs market. The continued recovery of employment depends on people being able to return to work, and on businesses staying open and viable. If the Delta variant puts any of these things at risk, the jobs market will be under pressure.

It also raises questions about the furlough scheme. After the change, the economy won’t be fully reopened by the time the furlough scheme tapers on 1 July. We know from our experience last year that as soon as the taper kicks in, employers will have to consider their position, and whether they can afford to keep staff on. They might not make anyone redundant on day one, but their jobs will be under increasing threat as time goes on and government help is withdrawn further.

Even if everything went to plan, the Bank of England was expecting half a million people to still be on furlough when it was withdrawn in September, so unemployment would peak at 5.5% in the autumn. If we reach the end of the summer with more restrictions in place and more jobs relying on government help, the rise in unemployment could be more significant.

It’s too early to say whether the economy will be fully open by the end of the furlough scheme in September, and we don’t know whether the government would be prepared to step in with another extension if it’s needed. However, there’s a real risk any delays to reopening could hit jobs later in the year.

Industry reaction

Tony Danker, CBI Director-General, said: “Public health comes first, so while a delay is regrettable, it’s understandable. Most businesses favour certainty and irreversibility over speed, as lifting and then reimposing restrictions would be a nightmare scenario for many firms. But we must acknowledge the pain felt by businesses in hospitality, leisure and live events. At best they’re operating with reduced capacity hitting revenues, and at worst, some aren’t open at all.

“Continuing restrictions means the Government must urgently revisit the support available. That starts with holding back on the tapering of business rates relief and extending the commercial rent moratorium for those sectors most impacted. A solution must also be found for the hard-pressed international travel sector.

“Above all, we must now learn to live with the virus, with a growing focus on the data for long term hospitalisations and deaths but also vaccine coverage. Firms do require greater clarity and guidance on the future of the Government’s support for workplace testing, which is helping to keep staff and workplaces safe. Ultimately, rapidly vaccinating citizens – both at home and abroad – remains the best way to safeguard economic growth.”

Joss Croft, CEO, UKinbound said: “Tourism businesses across the UK are balanced on a knife edge, struggling to remain viable while adhering to restrictions, and today’s announcement will put people’s livelihoods at risk and slow down the recovery of our towns and cities. Prolonging restrictions affects the whole tourism supply chain, in addition to hospitality business, and although health and safety must always come first, the Government must act swiftly and implement additional support measures for both hospitality and travel businesses.”

Alan Thomas, UK CEO at Simply Business, comments: “The confirmation of a minimum four-week delay in lifting restrictions is a set back for the entire country – but particularly for the self-employed and those who own small businesses. Of course, public health is paramount and the sooner we can overcome the pandemic, the better. Until then, millions of SMEs are set to continue facing severe trading restrictions.

“Our research shows that Covid-19 will cost SMEs £22,461 each on average. Over half (54%) previously found reassurance in the Government’s roadmap out of lockdown, but it’s likely there will be fresh waves of uncertainty among the small business community following today’s news.

“SMEs account for 99% of all businesses in the UK, 33% of employment, and 22% of all turnover. Put simply, if the UK’s to recover quickly, we need small businesses to bounce back – they’re the lifeblood of our economy and communities.

“Thankfully, the past year has shown that the UK’s SME community is resilient, resourceful and optimistic. As we continue to emerge from Covid-19, and in light of this most recent delay, it is vital we continue to support local businesses, shop small, and help small businesses survive and thrive.”

Gary Turner, co-founder & UK MD of global small business platform Xero, comments: “The four week extension to lockdown guidelines will impact many small businesses who have been relying on the relaxing of restrictions in order to re-introduce normal trading levels.

“The initial road out of lockdown timeline instilled confidence within the small business market, and our customer data showed green shoots of recovery as sales grew by 0.6 per cent y/y in April when averaging 2020 and 2021 monthly growth. However, our data suggests that 410,000 small business jobs must be created this year for the sector to return to the pre-pandemic job trajectory – and this extension continues to put pressure on the businesses who are running with reduced staff.

“While the vaccine roll-out continues, the delay is necessary in order to avoid more damaging lockdowns in the future. But the businesses who have been reliant on the lifting of restrictions in order to recover are the ones who will be most affected, and should not be forgotten about.”

Sridhar Iyengar, MD for Zoho Europe comments: “Throughout the pandemic, businesses and self-employed workers have borne the brunt of the government’s indecisiveness and last-minute U-Turn decisions, with many being unable to plan ahead more than a few weeks at a time.

“Whilst the government’s continuing business support schemes should be commended, it’s clear that organisations must take some matters into their own hands. By bolstering their technology infrastructure and ensuring they have the right software and cloud-enabled tech to quickly adapt to the rapidly changing global situation, businesses can be more flexible and less vulnerable to last minute cut-throat decisions or widespread uncertainty, such as what we’re currently witnessing with the rumoured extension of the 21st June lockdown lifting. The right technology decisions can not only make the difference now in terms of adaptability, but can help with the new hybrid working trend as well as future proofing business for whatever ways of work arise going forwards.”

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