We are currently surviving the Covid 19 pandemic, unsure when it will end, and as most people ask, “when can we get back to normal?”.
However, we cannot predict what normal will be. There are currently 3 million people unemployed and the figure is rising every week.
Currently, many businesses are surviving by having a number of staff on furlough and taking assistance from the government. Many firms will have taken advantage of the offer to not pay their VAT for the quarter to June, and not paid their income tax bill due 31 July. Also, many firms will have taken the “Bounce Back” and government-guaranteed loans.
Come 2021 the VAT and income tax will have to be paid and repayments of the loans will kick in. The government has spent £500 billion fighting the effects of the virus and will see a large reduction in revenue due to the increasing number of people unemployed and the reduced profits or losses businesses will make.
We ask ourselves “where does this all lead?” and unfortunately the answer is a worldwide recession.
After years of austerity paying off the country’s debt, we were all looking forward to a rosy future, economic upturn, reduced taxes, and a period of prosperity for the country as a whole.The high street banks are presently setting aside billions of pounds to cover expected bad debts they foresee in 2021.
I predicted the 2008 recession when most Economists were saying how well the country was doing. Unfortunately, I can now only predict a much worse recession which has already started and will snowball in 2021.
It is time for everybody to batten down the hatches and prepare for the worst. Now is the time to economise and slimline your business to survive the ride. If you want any help or assistance in looking to future proof your business from a financial point of view, please talk to us.