UK Economy Set to Experience ‘Deepest Recession in Living Memory’
UK Economy Set to Experience ‘Deepest Recession in Living Memory’ Discussed by Hayvenhursts Accountancy Service
According to a survey carried out by IHS Markit the UK economy is going to experience the ‘deepest recession in living memory’. IHS Markit is a global leader in information, analytics and solutions for the major industries and markets that drive economies worldwide. They partner with clients in business, finance and government to help them see the big picture with unrivalled insights.
The survey has suggested that UK GDP could fall at a quarterly rate of 7%. However, they have said the actual decline in GDP ‘could be even greater’.
Nearly 79% of businesses that provide services, such as hairdressers and restaurants, have confirmed they have seen their business activity fall as a result of the coronavirus (COVID-19) lockdown measures.
‘The data highlights that during the second quarter of 2020 the downfall in the UK economy will be far more and widespread than anything anyone has seen in living memory,’ said Tim Moore, Economics Director at IHS Markit.
‘The April survey reading is consistent with the economy falling at a quarterly rate of approximately 7%, but we expect the actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector.’
The Bank of England has warned and is predicting that the economy could shrink by 14 per cent over the course of 2020.
The impact of coronavirus and the global shutdowns will see investment and household spending plummet whilst unemployment soars.
The bank’s policymakers do however think the economy will bounce back fairly rapidly in 2021, however, not everyone is convinced about this.
What can you do as a business to survive the likely downturn in the economy?
Forward thinking and planning for your business will be crucial to you surviving the COVID19 pandemic. Businesses are having to think on their feet and adapt their services now and for when the lockdown is lifted so taking time away every week to evaluate where you are, where you need to be, what you can change and what you can do to get yourself ready to be fully operational again in this changing world is absolutely vital.
- Take your time to evaluate and break down each of your services and products
- Ask yourself if you need to add products and services to meet the needs of your customers now and in the short and long term
- Think about how can you change your services to meet the needs of your customers now and in the short and long term
- Decide and agree can you adapt your business premises and staff processes to enable you to operate safely in line with new health & safety legislation now and fully reopen when the lockdown is fully lifted. Don’t try and do this on your own, get staff involved and business acquaintances as sometimes an external view will help you to think outside of the box
- Speak to your suppliers to agree how things can work for you and them moving forward
- Speak to the businesses around you to see how their business plans are going and what their timescales and strategic plans are
- If you are renting a commercial property speak regularly with your landlord to agree workable rental plans are for you both now and in the future
- Ensure you have a good accountancy service who will work with you to plan your business finances, help you to produce a business plan for the short and long term and be someone who you can rely on at this difficult financial time. They will have the skills and expertise to understand what is happening in your business and be able to put together a realistic, achievable and robust business plan with you
How can you protect your business during this time of COVID19?
How can you prepare your business for when the COVID19 lockdown is lifted?
Research suggests that all businesses with a well thought out and written business plan are far more likely to succeed. At this time we would recommend that all businesses stop and take time to re-evaluate and rework their business plan for during and after the COVID19 lockdown, both in the short and lock term as businesses have and will change dramatically over the next 12 months as well as customer buying habits which are likely to change.
Whether you are still fully operating and your business has grown during the COVID19 lockdown due to the market sector you are in, or you have had to completely shut down or minimise the services you are offering, a revised business plan will give you the best chance of success when the economy is fully back up and running again.
The government has offered lots of support for businesses in regards to grants and loans during this time and you will almost always need to provide them with a revised business plan for any of these to be agreed.
At Hayvenhurst we are working remotely and can support you to review your current business plan and revise it for the short and long term. We can meet with you via video link or phone call and will support you to take a realistic and strategic view of your business. We can help you evaluate your business finances now and moving forward, and help you to create a business plan that is realistic and achievable through these changing times.
Our expert accountants and business specialists can support you with all aspects of your business plan. At Hayvenhursts we take time to get to know you and your business and will work alongside you to ensure you are set for success in this changing world, as well as providing tailored and personal advice and guidance on the financial aspects of the business plan.
Our Business Planning Services Include:
- All written elements of the plan such as business background, marketing plan, SWOT analysis, markets, competition and all of the other key elements that need presenting in the most suitable way to lenders
- Business strategy and goal setting
- Cash flow forecasts
- Profit forecasts
- Ongoing and regular reviews of your revised business plan to monitor how you are doing against the plan and if any changes are needed
Management Accounts and Information
At Hayvenhursts we always say if you measure it, you can manage it and by having up to date, relevant and smartly produced financial management information allows you to make the right decisions in normal or the unexpected times as we are currently in.
As well as this having relevant, accurate and planned management information will help us work with you to build your business plan for the short and long term and enable you to focus on the things that are most important to your business.
Our specialist accountants will work alongside you to produce relevant, timely and accurate accounts which will support you as well as help us to advise you on your businesses financials. Our management accounts and information services include:
- Monthly or quarterly management accounts
- Reporting of key performance indicators that are the underlying drivers that run your business
- Help with in house systems for you to produce your own information
- Training to ensure you get the most out of your financial information
- Supplying management information to lenders
- Branch/Divisional results
- Actual performance compared to budget and/or comparative periods
- Costing information, including break-even turnover levels
What should you do during COVID19 if you own a commercial property?
The government has introduced specific measures to protect commercial tenants in the Coronavirus Act 2020. Section 82 of the Act prevents you as a landlord from evicting your commercial tenants, whether by changing the locks or by commencing court action for possession, during the period commencing 26th March and ending on 30th June. This period may be extended by the government if it is needed.
The Coronavirus Act 2020 means that no business will automatically forfeit their lease and you cannot force them out of your commercial premises before the end of their lease date if they miss a payment due under the lease agreement.
The Coronavirus Act 2020 measures apply automatically to all eligible tenancies, however, tenants need to be aware that the measures in place are not a complete rental holiday. Your tenants will have to pay any unpaid rent during this time at a later date so it is a good idea to talk to your tenant about their situation and mutually agree how this will work for you and them. We would advise you to work collaboratively with your tenant to find a workable solution for you and them in the short and long term. Working together to agree these matters means you will maintain your working relationship with them and have a tenant in place when lockdown has been lifted and their business is fully back up and running again.
Many commercial landlords are offering different concessions and these include; varying the frequency of rent payments, agreeing a temporary rent suspension, basing a proportion of their rent on a percentage of their turnover, or accepting a reduced rent for a temporary period. Open and honest conversations with your tenant now will save you a lot of trouble and hassle in the long run.
We would also advise you to speak to your insurer to check if you are covered for business interruption and that your tenant also does the same. Insurance policies will vary and may or may not include force majeure events and pandemics so it is always worthwhile checking. We would also advise you to seek legal advice if you are unsure about any of your insurance policy wording or any information they are giving you.
Commercial Property Capital Allowance
At any time as a commercial property owner, Capital Allowances can provide significant opportunities for you or your business to make the most of tax savings. At Hayvenhursts we can potentially increase your tax savings even further through our commercial property Capital Allowance service.
If you own a commercial property privately or as a partnership, LLP or Limited Company, our Capital Allowance service can benefit you by way of a tax rebate or an ongoing reduction in your tax bill.
It doesn’t matter when you purchased or built your commercial property, how long you have owned it, or whether or not the property is leased to a third party Commercial Property Capital Allowance is still applicable.
At Hayvenhursts we offer a free and no-obligation evaluation and we work on simple fee criteria of – if we are unable to find you tax savings on your commercial property then you don’t pay us a fee. We will work through everything with you to ensure you are clear about what you are entitled to so you are able to make informed decisions throughout.
Business accounts are vital in regards to having them available when you need to submit them to HMRC and almost as importantly they are an insight into how your company is performing giving an opportunity for us to minimise your tax liability and payments and this is something you should always think about in normal and even more so in these unprecedented times.
Business accounts can also be used to look back on how your business has performed year on year and are extremely useful to look at year on year overall performance, profit & loss and will enable you, and us to use when we are creating your business plan for when the COVID19 lockdown has been lifted.
Whether you are a sole trader or a multinational organisation, account preparation is a fundamental and crucial part of your business and is something we are experts in. We pride ourselves in providing account preparation services to meet every client’s needs and will ensure we get to know you and your business to enable us to do this effectively for you.
Our account preparation services include:
- Prepare accounts to help in completion of self-assessment tax returns
- Produce financial statements to file at Companies House and abridged accounts to ensure the minimum amount of your financial information is made public
- Accounts preparation to meet agreed timescales and deadlines.
Our services also include reporting the financial history of your business which will help you when applying for grants or loans and when producing your business plan. Our services include:
- Identifying areas where we can assist in minimising your tax liability
- Identifying areas of your business that give you the most opportunity to make improvements and changes especially during these times
- Use the accounts to help you measure where you are in meeting your goals and what actions you should and need to take
- We take the time to explain your accounts to you so that you understand what is going on financially within your business, helping you to plan for the future in the short and long term when the lockdown is over.
We provide a totally joined-up approach, and thinking across all of your account preparation and HMRC returns ensuring your financial statements are clear and presented in a way that makes it easy for HMRC to process, taking away the worry and time you need to put aside if you are trying to do it yourself.
At Hayvenhursts we always say, “if you don’t know where you are going, you are certain to end up somewhere else” and having a balanced, solid and well thought out strategic plan is now more important than ever.
Our strategic planning service will help you:
- Agree on long-term strategic goals both personally and for your business
- Identify where you are now
- Work on your business so that you can spend less time working in it and focus more on its strategic growth
- Identify any barriers in your strategy
- Agree an operational strategy to overcome the barriers and meet your goals
- Develop business growth systems
- Grow a great team of great and talented people
- Monitor and track your results against your goals
- Manage the money in your business
- Develop an exit strategy if you want or need one
About Hayvenhurst Accountancy Services
At Hayvenhursts we are experts in all types of accountancy services and can help you and your business at this difficult time.
We don’t just offer a standard accountancy service but we get to know you and your business and will work alongside you to ensure your business has all the accountancy and expert business services that you need now and in the future.
We use our highly trained and experienced team members and put together a team of experts that understands your business sector, you and your needs resulting in a service which is individual to you. We will work alongside you to identify savings, tax breaks, improved cash flow and business efficiency through our defined and relevant accountancy and business services, establishing savings and opportunities which will improve your business’s short and long term prospects.
Contact us today and find out how we can help you at this uncertain time and how we can help you to futureproof your business.
Hayvenhurst Accountants COVID-19 STATEMENT
We have been carefully observing the development of the spread, Government advice and information and media surrounding the spread of the Covid-19 virus.
To protect our staff, clients and other contacts we would like to issue the following advice;
We would like to reassure our clients that it is business as usual at Haybenhursts offices. Our staff currently continue to work as normal. We are preparing for all eventualities and keeping the situation under constant review. We have plans in place to introduce different working arrangements should the need arise.
The wellbeing of our staff and clients remains our priority and we have put in place reasonable and proportionate arrangements to protect our colleagues and clients. These include:-
Clients are advised not to attend our offices, if not essential. Instead, we will arrange telephone or video conferences via Skype etc.
Elderly and vulnerable clients should not attend our offices at all.
Home or office visits will only be made if urgent and assessed on a case by case basis