COVID-19: The week’s key updates
COVID-19: The week’s key updates
After over three weeks of lockdown, it’s become clear that the UK won’t be returning to business as usual any time soon. And as well as the evident and immediate threat to public health presented by the COVID-19 outbreak, many of us are having to deal with the day-to-day reality of financial pressures, too.
This week, some important announcements were made that could directly affect the finances of many Scottish households; the government has pledged to extend lockdown for a further three weeks, new support has been announced for SMEs and the self-employed, and furlough has been extended. Here’s our rundown of the latest.
Lockdown won’t be lifted… yet
In an announcement on 17 April, Foreign Secretary Dominic Raab confirmed what we’ve all been expecting: lockdown will not be lifted for “at least” a further three weeks, meaning the soonest restrictions can be reviewed is early May.
Scotland’s First Minister Nicola Sturgeon backed the announcement, saying “Our advice is clear – if we were to lift any of these restrictions now, we would risk an immediate and potentially exponential resurgence of the virus.
“And that could result in our NHS being quickly overwhelmed, it could result in even more cases in our care homes and it would also mean much more loss of life.
“It could lead to the re-introduction of even more stringent restrictions in the future – with substantially more damage to the economy as a result.”
Funding announced for SMEs and self-employed
The Scottish government announced that £100 million is being made available to small businesses and the self-employed. The grant has been introduced to support those new businesses that are not presently eligible for other forms of government help and struggling as a result of the coronavirus outbreak.
Finance Secretary Kate Forbes said, “The creation of a £100 million fund is to help those micro and SME businesses who face immediate cash flow challenges, are ineligible for other schemes and are the productive base for supporting employment in the future.
“It will also support those newly self-employed people who are also ineligible for UK schemes and will be a vital lifeline for many businesses and individuals across Scotland.”
Furlough eligibility extended
A new change to the rules around the coronavirus job retention scheme could see thousands of people become eligible for furlough.
The furlough scheme was announced in March by the UK government to help reduce joblessness and redundancies in industries that have been affected by the COVID-19 outbreak. The fund provides a vital financial lifeline to cover workers’ wages for three months up to £2500 a month or 80% of their salary – but initially, employees had to have been on payroll from 28 February to be viable.
Now, the cut-off date has changed to 19 March, meaning that an estimated 200,000 employees will have another chance at government support. As of next week, the scheme should be fully up and running.
Universal Credit applications on the rise
Since lockdown was first announced, 1.4 million people across the UK have applied for Universal Credit.
The surge in figures comes as no surprise given the extreme economic challenges presented by the COVID-19 outbreak. Almost every industry has in some way been rocked by lockdown and social distancing measures, with firms going bust and significant job losses hitting both personal and business finances hard.
Universal Credit isn’t just designed to help the unemployed; it’s also designed to support self-employed workers and those who’ve taken time off work due to sickness. It takes around five weeks from an application date for applicants to receive their first payment, but an emergency loan – or “budgeting advance” is available to support those who are in dire straits and can’t wait that long.
For those self-employed workers who may be finding themselves applying for the benefit for the first time, it could be possible to speed up the process. If you already have a Government Gateway account, that you’ve used in the past 12 months, this should help make it easier to verify your identity.
“Tough times” ahead
A report from the Office for Budget Responsibility this week revealed several potential headline challenges for the UK economy as a result of the pandemic. The report’s projections made for grim reading, outlining that:
- There could be a 35% decrease in the economy
- Over two million are estimated to be facing joblessness
- GDP could drop by a third this spring
- Unemployment could be at 10% by late June
In his daily coronavirus update on Tuesday, Chancellor Rishi Sunak stressed, “It’s important to be clear that the OBR’s numbers are not a forecast or prediction.
“They simply set out what one possible scenario might look like – and it may not even be the most likely scenario. But it’s important we are honest with people about what might be happening to our economy.”
More FCA measures have been outlined
On Tuesday, the Financial Conduct Authority confirmed its guidelines to banks and other lenders in respect of loans, credit cards and overdrafts. However, interim FCA Chief Exec Chris Woolard introduced the measures with a word of caution, saying:
‘’Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.”
The changes include:
- The option of paying 0% interest on bank overdrafts over the next three months
- A temporary freeze on credit cards and loans on loans and credit cards
- Ensuring credit ratings won’t be impacted by these measures.
The regulator today (March 17) also added some draft guidance to the motor industry in its package of support for consumers in financial difficulty, opening up the proposal of a three-month payment freeze on car finance to comment from stakeholders.
If you’ve been left in debt and are concerned about the future of your finances, we have professional advisors on hand with free advice and guidance for those struggling with debt. To find out more, speak to one of the Carrington Dean team on 0808 253 3466, today.
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