It is fair to say that it has been an incredibly difficult few weeks for residents of the United Kingdom and, indeed, the wider world. COVID-19 has devastated the global economy, and it could be argued there will be long-lasting negative financial ramifications as a direct correlation with the health crisis that has engulfed the world. Many businesses up and down the country have had to close because of the COVID-19 pandemic, and the subsequent furloughing scheme initiated by the government to protect salaries across the country is now in full swing. There has never been a time quite like now, and indeed it could be argued that these are historical moments and events you will talk to your grandchildren about!
Impact on Businesses
Whilst several businesses across the United Kingdom have closed their doors, here at United Kingdom Loans we have remained largely unaffected by the health pandemic. The fact that our business operates entirely online has largely enabled us to remain open during the crisis with the capacity to continue to serve potential loan applicants across the country. Whilst it is acknowledged that the current crisis has had far-reaching implications when considering personal finances, the lockdown has had a positive effect in that outgoings have been restricted by the limitations in going out into the community. As there are lower outgoings in terms of net spending from the average British household, this has culminated in some breathing space when considering personal finances; however, a word of caution is needed when considering the net spending of each household during this health pandemic. Whereas it is argued that outgoings have reduced, income has also been adversely affected by the lack of employment opportunities although huge financial support has been provided by the government to many workers.
Although there are a plethora of key workers who have continued to be able to work during the lockdown, there are many other people who were previously in full-time employment who have been unable to return to work, and this has impacted income. Although the government is matching a percentage of some workers’ salaries, and indeed, this is also being applied to self-employed workers, the fact that many United Kingdom residents typically rely upon the majority of their income, any reduction in this is going to have a potentially negative impact, particularly over the long-term.
So what are the recovery options in terms of personal finances that have been impacted by COVID-19? The short-term strategy should be to continue to reduce outgoings, particularly for those people whose salaries are protected by government furlough schemes, or who previously worked on a non-contractual basis. Although outgoings from each household will have been reduced, the fact that income has been restricted and, in some cases, completely depleted by the ongoing pandemic will not be enough to balance the books in households where there is a salary not being paid into at least one member of the households bank account.
One of the key things to remember during this difficult time is to remain in communication with your employer, as they still have a duty to provide you with up-to-date information regarding your employment rights. If you haven’t already researched online to ascertain the specifics of registering for the furlough scheme, this will cover a proportion of your salary, albeit for a time-limited period. For self-employed people, there is also support from the government available and careful research should be taken around what next steps should be taken. It is times like this that having access to an accountant, who should have a clear understanding of the benefits available to the self-employed, is essential.