On Saturday evening many of us were awaiting Boris Johnson’s press conference. The Prime Minister confirmed rumours of a second lockdown to manage coronavirus infection rates. Starting this Thursday 5th November, a 4-week lockdown is set to begin in England.
This may be extended if infection rates haven’t come down enough and hospitals are overwhelmed. MPs are voting on the new measures in the House of Commons on Wednesday, but it looks highly likely they’ll be passed.
It’s expected that we’ll come out of lockdown on a regional basis, depending on how well the spread of the virus has been controlled. When rates do lower enough for hospitality, travel, leisure and tourism industries to reopen we’ll be continuing with the tiered system of COVID-19 threat.
Lockdown was announced on the same day the UK recorded its one millionth case. The devolved governments in Wales, Northern Ireland and Scotland are tackling the pandemic individually. For England, this second lockdown will not be as strict as the first but will certainly have a lot of consequences for businesses.
Under new restrictions, shops selling essential goods and services will be allowed to stay open. We’ll see exactly what falls under ‘essential’ in the coming days, but this mainly means food shops, supermarkets and chemists. Garden centres, shops and off-licenses are set to be included.
Any retailer that doesn’t fit under ‘essential’ must close its doors to the public on Wednesday night. Restaurants, bars and pubs must close after service on Wednesday night too and can only reopen if they provide takeaway or delivery. Pubs won’t be allowed to sell alcohol through takeaway this time.
Entertainment venues, indoor and outdoor leisure facilities and the like will all be forced to close. Cultural centres such as galleries, as well as beauty establishments like salons and barbers must all close too.
Schools, colleges and universities will remain open, as well as childcare services that allow parents to work. In this version of lockdown, anyone who can work at home must. You’re allowed to go into work if your job can’t be done remotely, so construction and manufacturing will be open for business.
The furlough scheme is being extended until December, when this lockdown is expected to end. The original terms will apply. Any employee that can’t work because of Covid restrictions (for example, in the hospitality industry) will have 80% of wages covered by the Treasury, up to £2,500 per month.
Extending the scheme with the full 80% government contribution is much more generous for employers than recent updates. In October, businesses contributed 20% of furlough payments as government payments covered 60% of wages. National Insurance and Pension contributions will still be required from employers. Any employee on payroll as of 30 October will be eligible for the scheme.
The £1,000 Job Retention Bonus will still be available to employers for every furloughed employee they keep on until the end of January. £1,500 is also available for any employer that gives a work placement to an unemployed 16-24 year old as part of the Kickstart scheme. And under the latest economic measures, firms based in England are entitled to up to £3,000 a month if they’re ordered to close.
UK GDP fell by 20.4% in April following the first lockdown was introduced at the end of March. Retail, hospitality, travel and tourism make up around 15% of economic activity, so closing these industries down for four weeks will have a significant impact on the economy. There are 500,000 businesses that will be directly affected.
It comes at a particularly difficult time as November and December are important months for retail and hospitality with the festive season. Ending the year strong can make a serious difference in these sectors of the economy. Given the nature of restrictions, economists are predicting around a 7.5% fall in GDP.
However, at a more general level things look slightly less negative. This time round schools will remain open, so parents won’t have to take time off work to look after their children. More people able to work will have a better impact on GDP than the first time we went into lockdown. What’s more, the economy is currently around 5% smaller than it was before the crisis, so in theory we have less far to fall.
It’s possible that the 2 December finish will be extended closer to the Christmas period so that restrictions can be loosened for families to meet over the holidays. Ministers might not be keen on taking the risk that stricter measures come back into Everything depends on infections and hospital admissions.
Keep an eye on the news to understand where infection rates are headed. If you need help planning your cash flow and resources in the coming weeks and months we have a range of funding options available. The CBILS application deadline has been extended to 31 January, so you now have more time to get fee and interesting-free finance for 12 months. As long as you have started (not completed) the application process by the end of this January you can still benefit.
For more information and advice on what you can do to safeguard your business head to our COVID-19 Impact Support Hub.