The UK has ‘never in peacetime, faced an economic fight like this one,’ said Chancellor Rishi Sunak, as he announced a package of measures to support businesses as the COVID-19 emergency grips the nation. But will these go far enough and what measures now will help firms survive this crisis?
The Chancellor’s words may have provided some reassurance, yet the reality is that the future is highly uncertain for many firms across the country. So much is changing – often hour by hour – and this is undoubtedly the most difficult of times for businesses of every description. Some sectors will be harder hit than others, such as hospitality, retail and leisure with specific measures being introduced here, such as a 12-month break from business rates and funding grants being made available of between £10,000 and £25,000.
Other sectors, such as financial services, are arguably in a better position in that it may be possible to allow many of their employees to work from home. However, they still face innumerable challenges in managing issues such as solvency, governance and regulatory matters as well as organizing a workforce that may become increasingly disengaged.
The government’s current offer of a support package totaling some £330 billion sounds significant – this sum is 15% of GPD – but time will tell if it will go far enough. But for now, the concern for many businesses is putting in place contingencies for their key services, or indeed just trying to stay afloat.
Where appropriate, the new norm for companies is to have all or a majority of staff working from home. Some businesses may already be setup to accommodate this change, however chances are this will be on a much larger scale than ever tested. To help with this, a number of providers including Google and Microsoft have made their messaging and remote working tools available free of charge.
Government guidelines in regards to non-essential travel has also meant businesses are conducting far more online meetings/ video conferences, with suppliers of these products seeing sharp rises in demand. Face to face business may well be grinding to a halt but there is no getting away from the fact that the consequences of the pandemic are already proving extremely serious, not just from a healthcare perspective.
Stock markets around the world remain extremely volatile as continued uncertainty and disruptions to supply chains take hold. Major car manufacturers such Vauxhall, Nissan, MW, Honda and Toyota have all suspended production in the UK in the wake of the epidemic.
Food supplies continue to be disrupted as panic buyers empty shelves in preparation for the worst. Schools will close from today, resulting in further pressure in finding childcare for those who are unable to work from home.
Business continuity planning – the best survival tool
The government’s strategy, although coming in for some criticism, has been to plan based on containment, delay and mitigation, with the government’s most recent action to impose a UK wide lockdown as of Monday night. The hope being that by restricting movement they can inherently stem the spread of the disease.
Further reassurance has come from outgoing Bank of England governor Mark Carney, who said he believes there will be ‘disruption’ rather than ‘destruction’ of the UK economy.
The pathway for financial services
The FCA has also published its own guidance for firms, telling them that contingency plans needed to be in place to deal with the pandemic and provide support for both staff and customers. There also remains the underlying need for businesses to be as resilient as possible and assess their key business services against any likely disruption (both current and future).
In terms of regulatory responsibilities, this could also entail planning for replacement of key stakeholders to meet Senior Managers and Certification Regime requirements.
Ways to minimize disruption to the board should also be planned for and there is also emphasis on IT security – cyber criminals could be more likely to strike if a business is considered to be vulnerable. HR will also need to work to ensure there are clear polices and procedures in place around home working, especially for firms which are regulated.
In his COVID-19 TV briefing, Prime Minister Boris Johnson stressed, ‘this country will get through it’, but even at this stage it looks certain that there must be a massive concerted effort from businesses and individuals. It certainly will not be business as usual– resilience in all its forms is being called on.