Economic effects of coronavirus By Ryan Barnett
T
he worldwide coronavirus pandemic has created a health crisis not seen since the Spanish Flu towards the end of WW1, over a century ago. However, the need to create social distance, and manage the outbreak through the control of movement and external borders, has already had a much bigger effect. Spending habits have automatically changed – focussing on food and goods which can be delivered, the global stock market is at its worst since the financial crisis and millions of people’s jobs are at risk as the economy grinds to a halt whilst many have already been lost. There are five million self-employed in the UK who will need both income and business support. They provide skills across all industries and sectors in the UK, contributing £305 billion to the economy last year. Several sectors are affected more than others: contractors in the arts and working in events felt the effects almost immediately. Tourism, construction and those selling goods came next. Personal trainers and yoga teachers suffered from gym closures, but many have gone online. The Recruitment and Employment Confederation’s latest jobs report saw a sudden dip in permanent placements, much sharper than seen during the financial crisis. IPSE’s latest Confi-
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dence Index results indicated a drop-off in work and earnings and a six-year record low in both their business and the UK economy. There are a wide range of other effects also taking their toll, with the world on the verge of an economic crisis, stocks, shares and currencies plummeting. Political leaders worldwide have
Confidence Index results indicated a drop-off in work and earnings and a six-year record low in both their business and the UK economy. seen a boost to their approval ratings, known as the “rally around the flag effect” as people look to leaders for security. It may look, in hindsight, much more like a war effort, with the economy paused and then remodelled in front of us to provide what we need. Louis Vuitton and Brewdog moved into making antibacterial gel and factories are still being encouraged to build ventilators.
BEYOND THE LOCKDOWN MONTHS The Government have outlined a package of support for the economy, with many measures targeted at the self-employed. Primarily, the postponement of IR35 for at least a year, which was causing increased uncertainty amongst freelancers. They have announced the Self-Employment Income Support Scheme (SEISS) for sole traders, after extensive consultation with IPSE. These schemes are built on top of loans, hardship funds and tax deferral pledges put in place to help businesses small and large, but more needs to be done. Limited companies, those who have become self-employed since April 2019, and those who earn more than the £50,000 cap have been left out of the scheme and will suffer the knock-on effects of this omission if no further measures of support are put in place. a There are longer term implications beyond concerns for freelancers' finances as they wait for support. Interest rates are effectively at zero which will help with mortgage payments, but not savings (although we are all pretty used to that). Mortgage holidays of up to three months have been guaranteed by the Government which may help you access more immediate cash. The stress on international markets might affect people's
modern work
