The UK’s long road to Covid-19 recovery
As the discussion on how the UK navigates its post-lockdown journey continues, it is becoming increasingly clear that the road ahead remains fraught with uncertainty.
There is a huge series of steps the government and organisations of all sizes must negotiate before reaching even a sense of life before Covid-19. Assessing the modelling of roadmaps and likely timeframes for economic recovery indicates the scale of thinking needed.
Throughout the Covid-19 pandemic, the health and wellbeing of the nation has been assailed from all sides. First and foremost, there is the tragic human cost of tens of thousands of lost lives. Then there is the loss of livelihoods so many have had to deal with, largely as a result of social distancing and its knock-on effects. Just as we search for that clean bill of physical and mental health, companies of all sizes will be seeking reassurances on their ability to continue trading.
Confidence and trust have been recurring themes throughout this crisis, and they will form the bedrock of a sustainable return to whatever is the new normal for the UK. For the millions of people working remotely and on the government’s furlough scheme, they will need confidence to safely return to work. It is important there are no false promises and no overconfidence.
A full and thorough review of the UK’s strategy in responding to Covid-19 will inevitably come when the pandemic is firmly behind us. What we can ascertain is that the lockdown has been more effective perhaps than the government imagined in its early modelling.
It has helped reduce the spread of the virus, however such a way of life can only be temporary. As it stands, more than 8m people in the UK are furloughed until October. Economically, this cannot continue indefinitely.
The question of trust comes from organisations knowing the government is being sympathetic and receptive to its needs post-lockdown. It is crucial the government starts and sustains a conversation with businesses desperate to get back to work.
Perhaps unsurprisingly, the lasting impact of the virus is starting to take hold with permanent job losses. ACCA’s weekly SME health tracker with the Corporate Finance Network has shown over the last month that small businesses are taking the difficult decision to cease trading. It is therefore crucial that the government focuses on reskilling and identifying skills shortages to get people back in work and drive economic growth.
Our research also reports 61 per cent of firms that made enquiries for the Coronavirus Business Interruption Loan Scheme are still awaiting a response, with just four per cent progressing to full application and nine per cent accepted.
In addition, findings reveal that 55 per cent of accountants’ clients have decided to defer their tax payments. Of these, just 36 per cent say they are likely to be able to meet these tax liabilities in six months’ time, indicating a significant 64 per cent will not be able to do so. This is a red flag for the future.
I am drawn to a statement recently made by Singapore Prime Minister Lee Hsien Loong, who said: “We can’t support every job, but we can support every worker.”
It’s a strong commitment, and while no two countries are identical, its sentiment and purpose can still apply.
It is important our resolve remains strong. It is easy to be daunted by the challenge. However, for business leaders, we must be inspired by the opportunity. Future ways of working will fundamentally change. For many people, digital is the next step, as much for the government as it is for the accountancy profession.
Accountants continue to be the trusted counsel organisations of all shapes and sizes rely upon. I know many of our members are working closely with their clients to find solutions. There’s an urgent purpose to this work, with the profession acting as value creators, protectors and communicators. Looking ahead, as we rebuild, we have the opportunity to think about how we can build better, so that business practices are more sustainable – in every sense of the word – and we recognise value in all its forms, whether that’s profit, people or the planet.
In our new report, Accountants, Purpose and Sustainable Organisations, we outline how accountants need to be central to advising their organisations on sustainable development that focuses not just on the traditional balance sheet but on broader stakeholder value, thinking beyond investors.
Accountants’ adaptation to new and challenging situations, such as Covid-19 and Brexit, will help their clients and organisations to find new sustainable value across social and public interest metrics, as well as advising on tax, financial and performance management.
The report highlights the role of the profession in helping organisations to navigate dynamic forces of change that generate both opportunity and risk.
Now more than ever, businesses need to be hyper risk-aware and primed for as many opportunities as possible on our all-important road to recovery.