Commenting on GDP figures for Q2 2020 published today by the ONS, British Chambers of Commerce Head of Economics Suren Thiru said:
“The UK suffered an historic contraction in economic activity in the second quarter as the coronavirus closed large parts of the economy. The dominant services sector suffered particularly badly in the quarter, with consumer-focused firms hit hardest by the pandemic.
“While there was a pick-up in activity through the quarter from the historically weak April outturn, this is more likely to reflect the release of pent-up demand as the economy gradually opened, rather than an indication of a sustained revival.
“With restrictions steadily easing, the second quarter is likely to prove to be the low point for the UK economy. However, the prospect of a swift ‘V-shaped’ recovery remains remote as the recent gains in output may fade over the coming months as the economic damage caused by the pandemic increasingly weighs on activity, particularly as the government support measures wind down.
“Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy. This should include supporting businesses to retain staff through a cut in employer national insurance contributions and targeted support to help businesses placed under local lockdowns.”
The UK Government is running a #ShopLocal week this week, as part of its #EnjoySummerSafely campaign. The week aims to celebrate the British high street – encouraging customers to come back to their safe local shops, supporting the local economy and local jobs.
A toolkit has been made available for busiensses to help with marketing the campaign. Access the toolkit here.
Commenting on the ONS labour market figures for August 2020, published today, BCC Head of Economics Suren Thiru said:
“While the headline data continues to lag behind the reality on the ground, the decline in the number of employees on payrolls and hours worked is further evidence of the damage being done to the UK labour market by the Coronavirus pandemic.
“The furlough scheme has been successful in preserving millions of jobs. However, with firms continuing to face a perfect storm of increased costs, reduced demand, and diminished cash reserves, unemployment is likely to surge as the government support schemes wind down, unless action is taken.
“A significant spike in job losses would be a major drag on any recovery, stifling consumer spending and reducing the productive capacity of the UK economy.
“To help businesses recruit and retain staff, more needs to be done to reduce the overall cost of employment and prevent substantial redundancies. This could include significant expansion of the Employment Allowance and a cut in employer National Insurance Contributions.”
A virtual business recovery festival will provide two days of free training, workshops, panel discussions and advice sessions to help Norfolk and Suffolk’s businesses restart after the Covid-19 lockdown.
RESTART, on 29 and 30 September, will be free for any business or organisation to join. With two live streams on each day, the festival programme is packed with opportunities to learn something new, share ideas, get practical support and hear from a wide range of speakers.
Organised by New Anglia Local Enterprise Partnership, with support from the team behind the Norfolk Enterprise Festival, the RESTART business recovery festival builds on the two-county Economic Recovery Restart Plan which was launched at the end of June.
Confirmed sessions include:
Business grants and funding
Life after furlough – what next for your employees?
Top tips for marketing to new customers, including social media, video and copywriting
Making your business greener – how to assess and lower your environmental impact
Upskilling your workforce
Chris Starkie, Chief Executive of New Anglia Local Enterprise Partnership, said: “We’re committed to supporting local businesses to get back on their feet after some of the toughest months they will ever have faced.
“Bringing together local partners and businesses to create two days of inspiring, exciting and practical sessions – hosted virtually and free for any business to watch – will help us to kickstart our recovery and give business owners the ideas, confidence and support they need to come back stronger.”
The Department for Education and the Education and Skills Funding Agency has created a webinar briefing presentation deck for Chambers, explaining the new employer incentives for Apprenticeships, Traineeships and Kickstarter.
If you would like to host a local webinar briefing for your members, please contact Nichola Akers at the National Apprenticeship Service.
Responding to today’s announcements of £200m for a new Trader Support Service the BCC’s Director of Trade Facilitation Liam Smyth said:
“Whilst the funding announcement for the Trader Support Service is welcome, we need to remember that the GB/NI Border model impacts businesses on both sides of the Irish Sea.
“Customs controls that are implemented through electronic means are still controls. For businesses to remain compliant they will have to upskill staff, implement new processes and invest scarce resources to be ready for the end of the transition period which is less than five months away.
“Until we know the outcome of the UK/EU negotiations, many questions will remain unanswered for businesses in the United Kingdom, and in particular in Northern Ireland where both the EU and UK customs rules will be applied, depending on the final destination of the goods.”
Norfolk County Council Public Health team have released new coronavirus communications toolkits to help support local businesses with reopening and controlling the virus.
The latest information and advice helps businesses understand and use the NHS Test and Trace to play their part in controlling outbreaks of Coronavirus in Norfolk. View the full toolkit and information here.
Alongside the toolkit, there are a variety of new resources for businesses to use. Posters and social media graphics are available on a wide range of topics from hand washing and social distancing, to scam and community support advice. In particular, they have just published a kit of tourism resources to help support accommodation providers, such as hotels, holiday parks, holiday lets and campsites. You will find these here.
Results from the latest BCC Coronavirus Business Tracker reveal that businesses are still facing significant cashflow challenges with the schemes announced in the Summer Statement failing to provide support at the scale needed to protect jobs after the furlough scheme winds down:
More than half of firms report cashflow decrease since June 2020, more than a third of respondents with improved cashflow cite furlough scheme cash
43% of firms intend to use Furlough Bonus, but other Summer Statement support schemes have low take up
BCC continues to call for bold interventions to protect businesses and jobs
The leading business organisation’s tracker survey, which serves as a barometer of the pandemic’s impact on businesses and the effectiveness of government support measures, received 517 responses and is the largest independent survey of its kind in the UK.
Business conditions
Firms reporting an increase in UK sales remained static at 34%, 42% reported a slight or significant decrease. Just over half (55%) reported a slight or significant decrease in their cashflow compared to last month.
A minority, 21% of firms, said that their cashflow position had improved. Of these, 64% said new customer demand was the driver of this. 35% cited the government furlough scheme, and another 24% and 25% respectively said loan and grant schemes had helped improve their cashflow position, demonstrating that many firms are still relying on government support schemes.
Summer Statement support
This week’s Tracker contains the first comprehensive survey of business sentiment on the Chancellor’s Summer Statement announcements of 8 July.
43% of firms intend to access the Job Retention Bonus, which will award £1,000 to firms who retain furloughed staff until January. A further 40% will not use the scheme. Figures from the BCC’s latest Quarterly Recruitment Outlook found that almost a third of firms (29%) expect to decrease the size of their workforce in the next three months.
Elsewhere both awareness and expected usage were low. 56% of businesses said they did not intend to use the Kickstart scheme, a further 31% said they had not heard of the scheme and 8% said they would like to use it but are ineligible. 62% of firms said they did not intend to use grants for employers who take on trainees and 65% of firms said they did not intend to access grants for those who hire apprentices. Our previous research has shown that just 12% of firms are planning to recruit staff this quarter.
20% of respondents said they would like to make use of the targeted VAT cut for certain businesses but that they were ineligible, indicating that some businesses think the scope of the scheme is too narrow.
Reducing the cost of employment
BCC continues to call on government to reduce the overall cost burden on firms to protect business and preserve as many jobs as possible in the coming months. The leading business organisation has called for an 18-month expansion of the Employment Allowance from £4,000 to £20,000 and an increase to the threshold for National Insurance contributions from £8,788 to £12,500. The latter could save businesses around £500 per job.
Commenting on the findings, BCC Co-Executive Director Claire Walker said:
“Business communities continue to face significant operational challenges, with a prolonged period of reduced sales and cashflow meaning many firms are showing signs of distress.
“Expected usage of schemes announced in the Summer Statement is relatively low, indicating they do not provide the right kind of support for many businesses at this critical time and a rethink is needed.
“With confidence and demand not returning at the scale firms need, the government must take radical steps to slash the tax burden around employment to help companies pay valued staff. A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions are needed now if he wants to help viable companies save jobs as the furlough scheme comes to an end.”
In a major investment to support one of Norfolk’s key industries, Council and business Leaders have agreed to fund a £2.225m Tourism Sector Support Package from the Norfolk Strategic Fund. The project, led by Norfolk County Council in partnership with all seven district councils and Visit East of England, is being put in place to help the tourism sector to recover from the impact of COVID-19.
The project aims to make Norfolk as safe as possible for both visitors to the county and local residents. Funding will be allocated to each District Council and to Visit East of England and will be used to help create a quality visitor experience whilst maintaining key Public Health messages to ensure we continue to keep Covid-19 figures as low as possible.
Cllr Graham Plant; Deputy Leader of Norfolk County Council said; “The visitor economy in Norfolk is worth £3.25bn a year and provides nearly 70,000 jobs in the county. With businesses forced to stop trading just before Easter – the start to the season – it has been amongst the hardest hit industries in Norfolk This package of funding will provide vitally-needed support to those businesses that Covid-19 may have had a devastating impact on. I hope this will help to restart the industry safely and our businesses will experience a safe and successful Summer.”
The package will support the ongoing work being undertaken at a regional and national level with VisitBritain and VisitEngland in seeking to become a Tourism Zone and to develop a sustainable, year-round visitor offer. Immediate activity will include improving the presentation, cleanliness and hygiene of key locations and communication with visitors in advance and, for example through marshalling. A small grants programme is being developed for businesses to support the costs of adapting to the ‘new normal’ and to make the changes needed to extend the season.
Intelligence from the sector reveals the deep impact of lockdown, with high levels of redundancies and business failure projected. This high impact fund is designed to support the Norfolk Recovery Plan and complement the Visitor Economy Recovery Plan developed by Visit East of England, local authorities and New Anglia Local Enterprise Partnership which was launched last week.
Pete Waters: Visit East of England: “This initiative is exactly what the industry needs as it seeks to get back on its feet. It is hugely important as businesses reopen that visitors and residents feel safe and are reassured. A second spike and lockdown would end Norfolk tourism in 2020 and exacerbate what is already a precarious position.”
Chris Starkie / Doug Field: New Anglia Local Enterprise Partnership: “This financial package for the hugely-important tourism sector in Norfolk is very welcome and complements the Tourism Recovery Plan which was developed with Visit East of England and all local authorities and published this week.”
Andrew Stokes: VisitEngland: “It is great to see this collaboration across the industry to developing a recovery plan for tourism, working together locally and nationally will ensure success and get tourism in the east of England on the road to recovery.”
Cllr Margaret Dewsbury: Norfolk County Council: “Working with Visit East of England, Visit Norfolk, local authorities and New Anglia LEP, and ensuring we follow Government guidelines and VisitBritain messaging, this demonstrates the level of joined-up thinking we are applying to helping tourism recover post-pandemic. The level of engagement and collaboration has never been greater, and we hope to see that continue in the future.”
The further easing of coronavirus restrictions in England – due to come in this weekend – has been postponed for at least two weeks, amid concerns over an increase in coronavirus cases.
Casinos and bowling alleys will remain shut, with Boris Johnson saying it was time to “squeeze the brake pedal”. Face coverings will be mandatory in more indoor settings, such as cinemas and people attending places of worship will also be among those required to wear face coverings, in a change that will be applied from next weekend.
The government’s rethink came in following new restrictions for some people in parts of northern England following a spike in virus cases.
The prime minister said progress against coronavirus continues, with the daily and weekly number of deaths falling, but warned that some European countries are “struggling” to control it – the UK must be ready to react.
Mr Johnson said planned reopenings for 1 August would be delayed for at least a fortnight. That means venues such as casinos, bowling alleys, and skating rinks must remain closed until 15 August.
Indoor performances will also not resume, pilots of larger gatherings in sports venues and conference centres will not take place, and wedding receptions of up to 30 people will not be permitted.
Separately, face coverings will be compulsory in more indoor settings where people are likely to come into contact with people they do not know, such as museums and places of worship, from next weekend. They are already required in shops and indoor transport hubs.
The prime minister said the rules for face coverings would become enforceable in law from 8 August.
Commenting on the Prime Minister’s announcement that the government will introduce new local restrictions and postpone the planned re-opening for some business from August 1st , Nova Fairbank, Head of Policy for Norfolk Chambers of Commerce said:
“Whilst tackling the public health emergency must be the priority, these announcements – made at short notice – will be a hammer blow to the Norfolk business and consumer confidence at a time when many firms were just starting to get back on their feet.
“The local business community needs as much clarity as possible from government if they are to plan ahead and rebuild their operations in the coming months. Ministers must also consider extending support to all firms, many of whom will be forced to close for an even more prolonged period, as well as targeted measures to help businesses placed under localised lockdowns.”
The UK left the European Union on 31st January 2020, and the transition period comes to an end in December this year. It is vital that businesses take action now to get ready for a new border operating environment from 1st January 2021.
Until the new border operating model was published on 12th July, we could only speculate on how goods would be controlled at our borders once we left the EU. It’s now clear – and the new model brings this into stark reality – that businesses need to prepare for a significantly higher level of customs declarations and associated administration. It candidly states “customs declarations are complicated”.
Declaration volumes will grow from 55 million now, to almost 300 million next year. The cost to business is estimated at around £7bn per annum, and the customs intermediary market lacks the necessary capacity to deal with the increase.
The detail
New border procedures for importing and exporting goods to and from the EU will be in place. Traders importing ‘standard goods’ – covering everything from clothes to electronics – will need to prepare for new customs paperwork. You will need to keep specific records of imported goods and you can opt to take up to six months to submit a full customs declarations for goods arriving from the EU.
Taxes will need to be paid on all imports, but payments can be deferred for up to six months until July. This will help trader cash flow until the end of 2021, but only if you or your agent have the correct approvals in place to use simplified procedures. Full customs requirements will apply to controlled goods from 1st January 2021 whether they arrive from the EU or elsewhere.
Businesses will be able to account for VAT on goods imports using Postponed VAT Accounting from the start of the new year. This means that once the staged introduction period ends, payment of VAT due on imported goods can be delayed until the next VAT return.
What does this mean for business?
Despite the much needed clarity on customs procedures, and a welcome delay through staged introduction of full customs controls, big challenges remain for most businesses. Declarations volumes will increase, costs will rise, traders need to skill up to deal with new procedures and time is incredibly short.
Companies trading across the globe will need to make a choice. Should they take advantage of the staged introduction of measures for EU imports and gain a cashflow advantage through delayed duty and VAT payments? Or, stick with the systems and processes they already know, and use the newly introduced postponed VAT accounting and guarantee free deferment accounts to delay border taxes by up to six months? Whatever you decide, businesses that export and import goods have change coming and it’s inevitable.
The wise amongst you will wake up to change and plan your level of readiness. There is much to do and qualified and compliance led customs experts are becoming a rare commodity.
As a business you need to decide how you are going to handle your imports and exports. Many businesses already use a freight forwarder to clear their goods across borders and we would recommend that you talk to your freight forwarder as soon as possible to see what you need to do for January 2021.
Alternatively, our expert team at Chamber Customs, our international trade training programmes and our overseas connections make Chamber Customs an ideal customs partner. As your business gets ready for the end of the transition period, our customs agents are ready to help you clear your goods at the border. Give us a call to arrange a chat, Norfolk Chambers and the Chamber network is here to support you and to help you to trade with confidence.
For more information, please contact our International Trade Manager, Julie Austin on 01603 729 706 or email: [email protected]
Norfolk County Council have released their latest economic report for January 2020 to June 2020. The report highlighted: Employment levels in Norfolk has increased by 2.1% from the same time last year, with Norfolk performing better than the national level (77.5% against 75.8%). The business birth rate for Norfolk has decreased steadily from 10.9% to 9.9% in the 5 year period between 2014 and 2018. Norfolk County Councl have successfully secured funding for a 2-year pilot project designed to increase applications to innovation funding streams. The IGFP project will work with existing business advice partners to address longstanding, low application rates from Norfolk and Suffolk based organisations to Innovate UK and other national innovation funds. The Business Secretary (Alok Sharma) published his long awaited decision on the Norfolk Vanguard Offshore Wind Farm on 1 July 2020, issuing a development consent order (DCO) for the offshore project and the onshore grid connection works/infrastructure. A new team is now in place to support apprenticeships across Norfolk. Sophie Allport and Simon Kenny (Apprenticeships Officers) joined in December 2019 with Katy Dorman (Strategy Manager) joining in February 2020. For full details of the latest economic intelligence report click here.