Going into the wintertime it was always made clear that there was a real and significant risk of a second wave of Coronavirus infections that may lead to measures being reintroduced restricting some freedoms in order to protect health and wellbeing.
Despite great success earlier in the spring and summer it seems that this warning has come to manifestation as infections rise steadily all across the UK, as they have been doing since the beginning of September.
The greatest risk has always been that there would be further significant damage to the economy if businesses were forced to close again and in fairness to the government, this absolutely seems to be a situation they’re looking to avoid.
Some restrictions have been set in place and they’re going to affect industries that are already hard hit such as travel and hospitality. This then raises tough questions for the government regarding support required for businesses and jobs that are likely to struggle.
The government has already spent massive amounts of money funding the lockdown earlier in the year, although this should be caveated by saying that borrowing rates are historically low, and so the cost of borrowing isn’t enormously high. If anything, it’s probably a good time to borrow for the government, but the question remains about where to focus that support, and how it affects the wider economy?
One of the options on the table for the chancellor Rishi Sunak is to introduce a similar scheme to those seen in New York, Germany and France.
Under the German scheme the government would top up worker’s wages and allow businesses to reduce their hours in order to keep them in a job. For example, if an employee works a 37.5-hour week normally, a company could reduce those hours to part time in order to save on wage bills and reduced capacity, and the government would top up the remaining time.
The government pays this in stages, with 60% of lost hours covered by the government for the first few months, rising to 80% for anything longer than 6 months.
According to a report by The BBC, ‘It has a long pedigree, going back to the early 20th Century. However, it came to prominence during the global financial crisis of 2008-09, when it is thought to have saved up to half a million jobs.
Even in normal times, it can be used by companies undergoing restructuring or suffering from seasonal fluctuations in their business.
But normally it lasts for only six months. During the pandemic, that has been increased to a maximum of 21 months, while the criteria have been changed to include more firms and workers.’
What does this say of the wider economy? Well, realistically things are actually recovering at quite a healthy pace and aside from the fact that workers have been instructed to work from home once again where they can, consumer demand has remained robust.
GDP is rising quickly and for jobs and businesses outside of the hospitality and travel sectors things have been feeling like getting back to some kind of normality.
Of course, a shining example of this is the property market where estate agents and sellers have seen surging demand ever since restrictions were lifted back in May. House prices recently set a new record and demand doesn’t seem to be dropping.
In actual fact, as told anecdotally by Buy-To-Let landlords nationwide, it has driven demand through the roof and has very much had an upwards effect on rents and tenant demand, making 2020 a very good year for property despite the uncertainty.
Of course, everybody wants a return to normality sooner rather than later, however, for now property and the wider economy seem robust and resilient.