Rishi Sunak took up the job of Chancellor of the Exchequer at the most extraordinarily challenging time for the United Kingdom and our economy.
Just five weeks after his appointment, the country went into lockdown, temporarily closing large numbers of businesses and throwing many more into unprecedented uncertainty.
The BCC’s latest economic survey has shown the economic impact of the pandemic, with key indicators of business performance including sales and cashflow falling to historic lows. Longer-term indicators of business confidence have also decreased sharply, which could dash hopes of a swift "v-shaped" economic recovery.
The Chancellor has since taken unprecedented steps to protect jobs and keep businesses afloat in response to the crisis. Further bold steps this week will be warmly welcomed by businesses around the country. But the big question remains, is it enough?
The focus on jobs is vitally important. People are at the heart of any business and widespread job losses negatively affect communities, lives and families like no other economic consequence. As the cost of the furlough scheme for employers increases from the beginning of next month, businesses are facing tough choices. Increasing core costs with reduced income – or in some cases, no income at all – will inevitably put jobs on the line.
The BCC and the Chamber Network have already seen young people bearing the brunt of job losses. We called for a comprehensive approach to protecting apprenticeships, supporting traineeships and preventing long-term unemployment for a generation of young people.
The Government has risen to this challenge and introduced new approaches to support firms to keep training while navigating challenging times.
Critical now, is to ensure these schemes get up and running at lightning speed, as the academic year comes to an end and school leavers look to the future with trepidation.
The furlough "bonus" scheme is an interesting innovation. But the devil, as ever, will be in the detail. How will the scheme protect against the unintended consequences of firms laying off the staff that haven’t been furloughed, instead of those that have?
And if a firm is doing well enough to continue to employ previously furloughed staff, do they need extra cash, or is that £9bn that would be better spent elsewhere? For example, by reducing employer National Insurance contributions. After all, the best way to protect jobs is to lower the overall cost of employment.
The Chancellor has also set out to tackle the demand challenge.
BCC data show that consumer-facing businesses are more likely to report worsening business conditions than firms from other sectors. Even with the easing of lockdown, footfall in our towns and cities has not dramatically increased.
People are still being understandably cautious and not returning quickly to old habits. The virus is still out there and having made huge family and personal sacrifices over a number of months in response to Government messaging to stay at home, many consumers are continuing to limit their behaviour even as official restrictions are lifted.
And it’s not just fear of the virus. With talks of redundancies and soaring unemployment, many people will be cautious about spending money with such uncertain times ahead.
In our submission to the Treasury we called for innovative thinking to stimulate demand, including the suggestion of a voucher scheme. While the Chancellor has responded with a VAT cut for tourism and hospitality, and a limited discount scheme, this is narrow in scope with parts of the supply chain and other sectors very much left out in the cold.
So is it enough? If 2020 has taught us anything, it is that it is impossible to predict the future. But looking at what has happened right across the economy, in all likelihood, more will be needed to get businesses back on their feet and to put the UK economy on the road to recovery.
The Government must remain open-minded to doing more, more quickly, to protect livelihoods and our nation’s financial health, and not simply wait for the set-piece event of the Autumn statement.
Even for those businesses that are operating, confidence is low. BCC research shows investment intentions have been hit hard during the pandemic, and so the Government should be preparing new incentives for business investment in the UK.
Back in 2018 the Annual Investment Allowance was expanded to £1m to stimulate spending in a stagnant economy in response to a call from the BCC. Expanding this for a further two years, and broadening its scope to include training, transition to net zero and spending on Covid-related workplace adaptations could be the measure that begins to unlock wider spending that leads to growth.
Confidence is key. Along with these financial incentives, Government needs to build back public confidence through its actions and words. Continuous improvements to the track and trace scheme, a clearer, more transparent approach to dealing with localised spikes in infection rates, and greater clarity of message will all go some way to encourage consumers to begin to spend again.
Of course, many businesses remain closed without any sense of when they may be able to re-open. The Prime Minister has promised a roadmap for the final phase of reopening and it cannot come soon enough.
Businesses like certainty, and they understand that in the current circumstances, any timeline comes with caveats as we continue to monitor the spread of the virus. But knowing the earliest point at which a business can open its doors would boost business confidence and enable them to start planning.
So it is welcome progress, but we are on a long journey out of this crisis and the Chancellor may need to put yet more fuel in the tank in the weeks and months ahead if he wants to see the economy recover at speed.
Hannah Essex is co-executive director of the British Chambers of Commerce