NEWS – THURSDAY 7TH MAY 2020
CORONAVIRUS (COVID-19) SUPPORT FOR BUSINESS UPDATE
Following the range of updates over the last several weeks, we have now rounded up the latest information from the government on specific schemes where additional detail was released. This update covers measures discussed on 4 May. Download here: –
BUSINESS UPDATE NEWS – THURSDAY 7TH MAY 2020
KSK Latest Business Update publication now available
EMPLOYMENT NEWS – THURSDAY 7TH MAY 2020
Hiring activity plummets to 22-year low
Data from KPMG and the Recruitment and Employment Confederation (REC) found hiring activity fell at the sharpest rate in 22 years last month with the survey also finding a record drop in overall vacancies and a steep rise in the availability of candidates. The REC is calling for the lifting of government support to be tapered to prevent more redundancies. James Stewart, vice-chair at KPMG, said: “The pandemic continues to wreak havoc on the UK jobs market with a record drop in vacancies and recruitment plans frozen. We estimate as many as 13m jobs are highly affected by the lockdown, just over a third of all jobs. It’s an unprecedented situation for UK business, and resilience, then recovery, is key to navigating through the crisis. All eyes will be on the forthcoming announcement on easing restrictions so confidence can start to rebuild.”
The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 70 The Times, Page: 46 Yorkshire Post, Page: 6
CORPORATE NEWS – THURSDAY 7TH MAY 2020
Clarks brings in Big Four firms for potential restructuring
Shoe retailer Clarks has brought in Deloitte to advise the company on a potential restructuring, raising concerns of more store closures amid the COVID-19 pandemic. Fellow Big Four firms KPMG and PwC will be advising the family shareholders and the syndicate of Clarks’ lenders, respectively. Last year, the retailer warned that it was under “significant stress” following a sharp decline in sales, and that it would make a “meaningful” number of store closures. These problems have been further compacted by the lockdown measures. A spokeswoman for Clarks said: “Our leadership team is currently reviewing all options to protect our business, our people and the Clarks brand for future long-term growth. It is our policy not to comment on specific commercial appointments.”
Debenhams to close five stores after lockdown ends
Debenhams has confirmed that another five stores will not be re-opening after lockdown restrictions are lifted. In a statement the retailer said: “We can confirm that despite our best efforts, we have been unable to agree terms with Hammerson on our five stores in its shopping centres, and so they will not be reopening.” Debenhams fell into administration for the second time in a year last month, with FRP Advisory brought in to help get the business in the best possible position for when restrictions are lifted.
The Daily Telegraph, Business, Page: 2 The Guardian, Page: 29
Uber to axe 3,700 staff
Uber has announced plans to cut 3,700 full-time staff with the company saying the reductions will come from its customer support and recruiting teams. The firm saw demand for its taxi services fall by more than 60% in coronavirus hotspots during March.
Nuffield Southampton Theatres enters administration
Nuffield Southampton Theatres (NST) has entered administration as a result of the financial impact caused by coronavirus. Buyers are being sought by joint administrators Greg Palfrey and Steve Adshead, from the south coast office of Smith & Williamson.
Top investor calls for dismissal of Wirecard chief Markus Braun
Shareholders are calling for the dismissal of Wirecard CEO Markus Braun following KPMG’s special audit into its accounting and business practices. The probe found no evidence of fraud but raised questions about accounting methods and the existence of certain sales and clients.
Companies are dangerously drunk on debt
The FT features a column urging changes in debt taxation, bonus rules and pensions to address “the iniquities of the current system,” which remains vulnerable to future crises.
SMEs NEWS – THURSDAY 7TH MAY 2020
Small firms secure £2bn in bounce-back loans in first 24 hours
Small businesses have secured more than 69,000 government-backed loans worth in excess of £2bn in the first 24 hours of the scheme’s launch. The number represents 53% of the 130,000 applications lodged by businesses trying to access cheap funding through the Bounce-Back Loan Scheme (BBLS), which launched on Monday morning as part of the government’s response to the COVID-19 lockdown. The government-backed loans are worth up to £50,000, capped at 25% of a firm’s turnover, at an interest rate of 2.5%. Mike Cherry, the national chairman of the Federation of Small Businesses, said despite a “promising start” for the bounce-back scheme, some firms were still reporting difficulties. He said: “Many of the most vulnerable business owners – particularly sole traders – only have personal banks accounts and, as a result, are being told they cannot access a bounce-back loan. It’s vital that they are helped to secure the finance on which many will depend to make it through this incredibly challenging time”. It is also reported that if a business does not have an account with one of the accredited lenders they face a long wait. Mr Cherry added that alternative lenders should be signed up rapidly to improve the reach of the scheme.
The Guardian, Page: 27 Daily Mail, Page: 70 The Daily Telegraph, Business, Page: 3 Financial Times, Page: 2
We need less than a week to restart, small businesses say
A survey by the British Chambers of Commerce (BCC) reveals that Britain’s smallest businesses would need less than a week’s notice to restart operations. Only 3% of businesses said they would need more than three weeks’ notice to get back up and running once lockdown restrictions are eased, the BCC’s coronavirus business impact tracker found. Elsewhere, a poll of members by the Institute of Directors found just 49% of firms believed that they could “operate viably at pre-lockdown levels” while maintaining social distancing rules. “Social distancing presents an unprecedented challenge for firms and some may be simply unable to make it work,” said the IoD’s Jonathan Geldart.
The Independent, Page: 55 The Times, Page: 47 The Daily Telegraph, Business, Page: 3
PROPERTY NEWS – THURSDAY 7TH MAY 2020
Business rates revaluation postponed in light of pandemic
Communities secretary Robert Jenrick has confirmed that a business rates revaluation has been postponed, as the government seeks to provide more clarity to businesses affected by coronavirus lockdown restrictions. Kate Nicholls, chief executive of UKHospitality, remarked: “Delaying is a pragmatic move at such a demanding time for businesses. It is vital that the revaluation occurs afresh after the crisis to reflect the impact of COVID-19 on commercial property costs,” while Gerry Biddle, business rates lead at Deloitte, added: “Property values as at 1st April 2019 will no longer be used and businesses will likely benefit from a recalculation at a later date.”
Financial Times, Page: 3 The Daily Telegraph, Business, Page: 7 The I, Page: 43 Yorkshire Post, Business, Page: 3
PENSIONS NEWS – THURSDAY 7TH MAY 2020
House moves behind £19.4bn in lost pensions
Research by the Association of British insurers (ABI) suggests there are about 1.6m pension pots worth £19.4bn which are going unclaimed due to savers failing to contact their pension provider when they move house.
ECONOMY NEWS – THURSDAY 7TH MAY 2020
Eurozone contraction threatens single market
The European Commission has predicted a 7.7% slump in GDP across the eurozone this year with recovery not expected until the end of 2021. Economy commissioner Paolo Gentiloni warned that the divergence in the depth of the recession across different countries would pose “a threat to the single market and the euro area.” The forecasts came as a purchasing managers’ index (PMI) survey of businesses revealed that activity in the eurozone collapsed to the lowest level on record in April. The composite PMI fell to an unprecedented 13.6, down from March’s previous record low of 29.7. Britain, which remains in the single market and customs union until the end of the year, is forecast to contract by 8.3%. France will be hit almost as hard, with a forecast contraction of 8.2%, while Germany is set to suffer a predicted fall of 6.5%. Southern states are expected to see contractions closer to 10%.
Business demands clarity on easing lockdown
Business leaders are calling for comprehensive forward guidance from the government on what restrictions could be lifted and when as bosses grow increasingly impatient for a clear route out of the lockdown. Adam Marshall, director-general of the British Chambers of Commerce, said businesses “know government may have to pause or change the process based on new scientific advice, but need some guidance in order to plan effectively for restart.” Meanwhile, MakeUK, the manufacturers’ trade body, has published a plan for the sector’s recovery which includes extending support while demand is gradually lifted back to pre-crisis levels. Elsewhere, Jonathan Athow, Office for National Statistics deputy national statistician for economic statistics, has said the UK economy will face a “significant decline” in the first half of the year.
REGULATION NEWS – THURSDAY 7TH MAY 2020
Brussels plans new anti-money laundering authority
The EU is to consult on plans to create a new anti-money laundering enforcement body as Brussels seeks to ramp up Europe’s response to a wave of money-laundering scandals.
Contact Paul Southward