27.7.2021 | TaxThe future financial impact of the pandemic
Stephanie Hammond, Director at Beatons Group, takes a look at the upcoming national bill.
As coronavirus restrictions are lifted in England, the financial impact of the pandemic on the nation’s economy is coming to light.
Throughout the pandemic, the UK Government has sought to support businesses financially while at the same time having to make difficult decisions that negatively affect them.
The latest figures from HM Treasury reveal the government paid out nearly £80billion in emergency loans to limit the damage caused by COVID-19 restrictions.
Here, Stephanie Hammond, Director at Beatons Group, takes a look at the upcoming national bill.
You would be hard-pressed to find a business that hasn’t been negatively affected by the pandemic and the measures brought in to limit the spread of the virus.
From logistics to hospitality, almost every firm has had to adapt to the circumstances, often with little time to prepare.
And the impact doesn’t end there – with thousands being ‘pinged’ every day by the NHS app and forced to self-isolate, many businesses are now suffering a staffing shortage.
However, the damage to business has been mitigated somewhat by a raft of loans and grants on offer.
According to HM Treasury, more than 1.6 million government-backed loans were approved between April 2020 and May this year.
Figures reveal almost £80bn worth of emergency loans were issued during the COVID-19 crisis.
These include £47.4bn in Bounce Back Loans, £26.4bn in Coronavirus Business Interruption Loans, £5.6bn in Coronavirus Large Business Interruption Loans and £1.1bn for the Future Fund.
The UK government’s Recovery Loan Scheme is also set to run until December 31 this year, providing an 80% guarantee to lenders for short term loans, overdrafts and invoice and asset finance.
As the scale of the pandemic was revealed, it was crucial the government stepped in to help businesses, especially as it brought in restrictions to fight the spread of the virus.
However, this financial support does not come without a price to pay later down the line.
From April 2020 to April 2021, the UK Government borrowed a staggering £229bn – the largest sum in a single year since records began.
And although the figure is set to be down on last year’s, it is expected to still be in excess of £200bn.
As restrictions are lifted, and our lives go back to some semblance of normality, the next question will be how we pay off this debt.
Will the government raise taxes to recoup the money, or cut spending?
We will have to wait to see what the government has planned.
Either way, the full impact of the pandemic will be felt for generations until the debt is paid off.
For more on Beatons Group, visit beatons.co.uk or call them on 01473 659777