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Lockdown extension a 'hammer blow' to businesses

The decision to delay lifting the remaining Coronavirus restrictions in England by four weeks beyond June 21 has been described as a ‘hammer blow’ by the British Chambers of Commerce (BCC).

Claire Walker, Co-Executive Director of the BCC, said: “Businesses will be disappointed by this setback to the reopening in England. This delay to the removal of restrictions will come as a hammer blow to those firms who must remain closed, and to those who continue to see their ability to trade severely restricted.

“Many firms have fought incredibly hard to stay afloat throughout the pandemic and are struggling with the damage done to their cashflow and revenue. They are desperate to play their part in the recovery. We must ensure they receive the support, and the clarity, that will give them a chance to do that.

“It would be extraordinary if we saw government retracting support to businesses now, given that some firms will remain unable to fully trade and others effectively forced not to trade at all.”

Stuart Elford, Chairman of British Chambers of Commerce South West (BCCSW) – the regional affiliation of accredited county chambers in the South West, of which Somerset Chamber is a member – said the latest lockdown extension could have a ‘catastrophic’ effect on business.

On behalf of the BCCSW, he urged the Government to continue to support businesses and to avoid a ‘stop-start’ approach to reopening the economy fully.

The British Chambers of Commerce is now calling for extended packages of financial support which are commensurate with any delays.

Schemes such as furlough have offered a lifeline for businesses in badly affected sectors such as those in the leisure, hospitality and tourism industry.

Mr Elford said: “This extension to the lifting of lockdown is very disappointing news and will be absolutely catastrophic for some businesses.

“However, businesses would prefer that there was a delay, rather than another stop-start approach which is very, very disruptive – ramping up supply chains, operations and staffing is very difficult.

“As the Prime Minister has said, we have got to make sure that the next step is irreversible.

“Any delays must be matched with extended financial support for businesses. Support like this is critical if businesses are to survive during this hugely difficult time and reach the full lifting of restrictions.

“There are businesses – those who have embraced digital technologies early and are trading online – which are doing very well and we expect a bounce-back in the economy very quickly.

“But of course, the South West relies heavily on leisure, hospitality and tourism, together with the food and drink industries, and the impact of coronavirus and Brexit has made it particularly difficult for these businesses.

“Sadly, there are businesses that will fail because they’ve really struggled and their limited cash reserves have run out.

“That is why there must be support, to allow these businesses to survive. If we can just get over the line and get to a full easing of restrictions, that will result in businesses surviving, a rise in employment and be much better for the whole economy.

“It’s incumbent on all of us to be sensible with making sure we don’t lapse back into any sort of restrictions, but what we can’t have is a start-stop economy which will simply decimate the business community.

“We’ve always said to the Government that they need to make early decisions and communicate that as soon as possible, together with what their intentions are to support businesses.”

On the issue of business support, Ms Walker added: “The Government must provide further cash grants, at least equivalent to levels provided during the first lockdown, and delay the tapering of government payments into the furlough scheme, planned for the start of July. The government should also consider extending the trade credit reinsurance scheme beyond the end of June to minimise possible disruptions in insurance coverage. 

“Government should work with lenders to ensure that appropriate forbearance is in place for those who have used government lending schemes and already started to repay their loan without being able to open fully. 

“An extension of the VAT deferral scheme and the 100% Business Rates relief for eligible businesses should also be considered given the length of the delay and the impact on hospitality and leisure firms.”

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