Date Published: 19/05/2020 10:25
Financial planner Emma Baumback considers what next as we head to the end of lockdown and the turbulent economic times ahead.
We are now in ‘Phase 2’ and the Government has set out a plan for our exit out of lockdown (albeit in a very confusing manner). We appear to be past the peak of the virus and after a long couple of months, it feels like there is a light at the end of the tunnel.
In my world, we have seen markets stablise in recent weeks offering some respite to investors following the nail biting falls we experienced in March. Focus is now towards the longer-term economic impact of the coronavirus and what this looks like for our livelihoods.
Whilst positive news keeps us all going, uncertainty, volatility and risk remains very real. At present, the Government is insulating us against financial difficulty through the furlough scheme, self-employment income support scheme, business grants and loans. Taxes have been deferred, loans have been granted, but they will need paying eventually.
According to the Office for Budget Responsibility (OBR), estimates are now suggesting that the budget deficit could be as high as £337 billion, an astonishing amount and the highest level since the World War II.
This means that the Government will need to find a combination of measures to increase their tax take and we could likely see reforms in pensions tax relief, inheritance tax and State Pension to name a few.
To add further, the Bank of England expects the UK economy to shrink 14% over 2020 as a result of measures introduced to stop the spread the coronavirus. Alongside the fall, the Bank also predicted that unemployment would more than double.
It goes without saying, there is a difficult road ahead, we will see many businesses close their doors forever, but for those who can put up a fight, beginning to plan the road to recovery sooner rather than later is key.
As a business owner, taking that first step is asking yourself; what will my business look after this? Whilst we can be seen to be ‘making do’ and ‘getting through this as best as we can’, business owners must give serious consideration to their cashflow and the sustainability of this when furlough is expected to end in October.
Me and my team having been working in the background to find solutions and possibilities to help revive businesses after Covid. We are aware that for both new and existing clients, we now have to look at advice in a slightly different way and reassess long-term goals.
We have been working in the background to identify resolutions and remedial actions for clients who are struggling with cashflow, or who are facing the impact of the banks tightening.
As an example, this could mean reviewing and considering pension schemes to ease the financial burden, including:
As financial planners, our job is to help and support our clients, reacting to ever changing circumstances in whatever way required and Future Life will continue to do so during this medical emergency.
If you would like some assistance, to air your financial concerns no matter how big or small, please contact us and we will be happy to arrange a conference call / virtual meeting with you.
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