10 Mar 2020
This week the Chancellor has the unenviable task of setting out his Budget proposals in highly unusual circumstances. If we had hoped that the economic impact of Coronavirus would remain confined to a limited geography those hopes are now fading.
Last week I attended the British Chambers of Commerce Annual Conference in London, with a keynote speech from the Secretary of State for Health Matt Hancock MP.
Two messages could hardly have been clearer. The Government will follow the science in making any decisions it may have to make in restricting public activity. And the economic consequences of those decisions will be firmly in the Government’s mind.
Those consequences are becoming most immediately obvious for those in the travel and hospitality industries with the cancellation of so many flights, events and hotel bookings. I would otherwise have been in Cannes this week promoting Glasgow investment at the MIPIM property market, but MIPIM along with so many other major events has been postponed.
More locally the impact is now beginning to emerge with many corporate members making policy decisions that restrict travel and hospitality at the very least.
Glasgow Chamber of Commerce is therefore adding its voice to the call for Budget support measures for businesses that are likely to find themselves struggling with cash flow as customer demand drops.
The most important measures for smaller businesses are likely to be those specifically aimed at easing cash flow pressures. Greatly expanding flexibility on the payment of taxes including VAT, PAYE and employers’ national insurance should be one avenue.
The Scottish Government should also look at similar measures to help local authorities offer holidays or, at the very least, delayed payment on business rates.
Both Governments could work together in the setting up of an emergency business loan fund to offer either direct lending support or guarantees to work alongside the banks. The banks themselves will be considering their own support measures with, for example. Royal Bank of Scotland already announcing today a £350m fund including temporary emergency loans and repayment holidays.
Of course the Chancellor will also need to judge how much he will need to inject into the economy to boost demand as the effects of the virus begin to diminish but for many smaller businesses – and obviously for the jobs that go with them – it will be the short term that counts most.