The coronavirus pandemic has impacted individuals, businesses and entire industries across the globe, increasing anxieties and uncertainty around health, business and the economy.
As a specialist financial broker, we understand the importance of maintaining our top knowledge levels of current trends and news. This way, we can continue to provide bespoke and relevant financial solutions that best fit the requirements of our clients.
Last week, our Senior Business Development Manager Mike Kelly, attended the virtual briefing of the Monetary Policy Report from the Bank of England.
The report outlined the impact of COVID-19 on the economy, the Bank of England’s response and a scenario of what could happen next. The knowledge of these key features remains pivotal to our processes, so that we can provide truly experienced and expert solutions during unprecedented times.
COVID-19 and the impact on our economy
It is no secret that the outbreak of the coronavirus has had an impact on the economy. With many key features of the UK economy essentially having to pause, or stop business altogether, there has been a substantial financial effect that has been felt by many.
The main features from the Bank of England’s Monetary Policy Report found that economy activity has fallen sharply. The report found spending to have decreased in:
- Hotels, restaurants and bars
- Clothing and footwear
- Transport and communication
- Health and education
- Recreation and culture
- Misc. goods and services
- Household goods
With many businesses within these sectors closed or deemed non-essential, these findings are not surprising. The only category of spending that continued to increase was food, beverages and tobacco as these shops remained open to support the UK with the essential items needed during the pandemic.
The housing market and property development stalled with the amount of listings added and sales of properties decreasing by over 80%.
Fortunately, the government has recently set out plans to restart England’s housing market with estate agents now able to open, viewings allowed to be carried out and removal firms and conveyancers restarting operations. This is hugely positive for the economy as the property market, along with sectors such as restaurants and agriculture, are fundamental to increasing public morale and boosting the economy.
The Bank of England’s response
In response to the financial uncertainty caused by the outbreak of the coronavirus, the Bank of England reduced the Bank Rate to 0.1%, the lowest in history.
As well as this:
- A term funding scheme was also set up, with additional incentives for SME lending.
- The countercyclical buffer for banks reduced from 1% to 0%.
- The COVID Corporate Financial Facility (CCFF) began.
- There was an increase of £200bn in asset purchases to £654bn.
What could happen next?
The Bank of England estimates that Gross Domestic Product, or GDP, will pick up relatively rapidly towards 2020, although it is likely to take some time to recover towards the previous path we were on pre-coronavirus outbreak.
The Bank of England also estimates:
- Unemployment will rise sharply, before falling back gradually.
- The estimated cash-flow deficit declines over the 2020–21 financial year.
- Banks are projected to lend approximately £55 billion to UK corporates over 2020.
- Banks’ capital positions were over three times higher than their pre-global financial crisis levels.
Finance 4 Business
“Whilst uncertainty does provide for anxious moments, let’s not forget that the same times breed opportunity. Enquiries continue to come in and are being dealt with in the same way.”
“Let’s work together as this country is so accustomed to doing, and come through the other side stronger than before.” – Russell Martin, Founder & Managing Director, Finance 4 Business.
As the government prepares the country to slowly move out of lockdown, opportunities for investments continue to increase. Whether you are interested in commercial mortgages, CBILS, property development or bridging finance, we can help.
At this uncertain time, Finance 4 Business remains stable and reliable when supporting you with your future business investments. We still have lenders that are hungry to lend.