How is Covid-19 impacting small businesses?

4 May 2020

In just a few short weeks the world has become unrecognisable. The pandemic sweeping the globe means we are now fighting an invisible enemy – Covid-19. This makes us virtual prisoners in our own homes, unable to go to work, school, shops or restaurants. This situation has had a massive impact on stocks and shares, as businesses are unable to continue trading in the current climate. While both individuals and businesses seek ways to protect their finances, some may be considering whether cryptocurrency markets can offer a potential solution.

In such unprecedented times, prices of stocks and shares continue to fluctuate, impacting pensions, ISAs and savings. The FTSE 100 and Dow Jones have seen their biggest falls in value since 1987. The value of the pound is now recovering slightly after hitting a 30-year low in March. As many of the world’s central banks begin quantitative easing, the value of currencies such as the dollar and pound are likely to be further weakened. The International Monetary Fund warns the worldwide economy will shrink by around 3% this year.

Conversely, Bitcoin saw a significant 20% gain on March 20th, suggesting some investors seeking alternatives to traditional investments opted for crypto. The value of Bitcoin and other cryptocurrencies has also seen greater fluctuations than usual though. As more businesses had started to adopt cryptocurrency as a viable method of payment in recent years, where does this situation leave them? It seems no currency, digital or otherwise, is entirely protected from the fallout of Covid-19.

In Harrogate, and throughout Yorkshire, small businesses are feeling the strain. Pubs, cafes, restaurants and shops have been left with no option but to close, while others are adapting to new ways of working, offering deliveries, takeaways and online services. According to ONS statistics, many small businesses throughout the UK were struggling even before lockdown, with 45% reporting lower takings than usual in March.

The travel industry in the region has also been hit hard, as the Foreign Office advises against all foreign travel, unless essential. This means no summer holidays for the foreseeable future, and travel agencies, airlines and airports are suffering as a result. The sad truth is that the longer the current situation goes on, the more likely that small businesses in Harrogate will struggle and risk facing permanent closure.

Manufacturing is also suffering, as imported raw materials can’t get through because of the travel ban. This has had an impact on the value of oil used to produce all manner of materials including plastics affecting many factories.

Some Government support is available, and many businesses have taken advantage of the Job Retention Scheme, which means the Government will cover 80% of their employees’ wages for those who were employed before the 28th of February. This also applies to staff that have subsequently been laid off. Small businesses can also apply for further Government support in the form of tax relief, loans and grants. Other support available that may help those struggling financially includes mortgage payment holidays and finance payment breaks on business assets such as fleet vehicles.

As lockdown continues, scientists urgently seek a vaccine or cure for Covid-19, but with no clear exit strategy in place, and a vaccine still months away, what will happen next is unclear. The longer we remain in lockdown, the greater the impact on the small business community in our region.

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