The United Kingdom risks destroying one or two punches from coronavirus and Brexit

The United Kingdom risks destroying one or two punches from coronavirus and Brexit

The head of the Confederation of British Industry, which represents 190,000 British companies, warned on Thursday that businesses could not withstand another shock after coronal pandemic forged their cash reserves and left a lot struggling to survive.

UK and EU officials are trying to agree on new trade terms after Brexit takes effect in January, but progress has been painfully slow and time is running out to avoid a rupture when transitional regulations expire at the end of 2020.

“The resilience of British companies is absolutely on the floor,” said CBI Director General Carolyn Fairbairn. BBC. “Every penny of cash that has been stored, all the stocks that have been prepared have been depleted. The companies I am talking about have not had a moment to plan a Brexit without a trade agreement at the end of the year,” he added. “As a [CBI] A member of mine put it on – just because the house is lit, it’s not okay to set fire to the garden shed. “

British companies have already borrowed around 35 35 billion ($ 44.4 billion) as part of government coronation relief programs, according to data released by the UK Treasury Department on Tuesday. And nearly 9 million people – about 27 percent of the workforce – rely on the state to pay all or part of their wages at a cost of ,6 19.6 billion ($ 22.2 billion) so far.

The United Kingdom is heading for its worst financial crisis more than 300 years due to the pandemic, even when it reaches the self-imposed deadline to conclude a trade agreement with the European Union, its only major export market.
The UK’s major companies have already announced more than 75,000 job cuts, with more coming as some exclusions and social distances continue. Energy company in the UK Centrica (CPYYY) He said Thursday that he had cut 5,000 jobs for the most part by the end of 2020, and Bombardier (BDRAF) confirmed that 400 jobs would be created in Northern Ireland. Smaller companies are under attack, adding hundreds of thousands of job losses to the total.

Unemployment in the UK could rise to almost 15% in the fourth quarter if there is a second corona outbreak, according to the Organization for Economic Co-operation and Development.

The Paris-based group said Wednesday it expects the UK economy to shrink by 11.5% this year, even if a key free trade agreement with the European Union is reached and a second wave of infections is avoided.

This is the worst projected contraction between the big economies. And if the infections rise again and stricter social distance measures are reintroduced, GDP could collapse by 14%, the OECD added.

Most at risk are companies in the hospitality and travel industry. Many restaurants and pubs fear that they will not survive, even if they are allowed to reopen next month as planned, due to the social rules they remove.

Council of Ministers are now pushing to reduce Britain’s two-meter social rule to one meter, according to the World Health Organization, according to a government source who spoke on condition of anonymity. This will be vital to reopening bars, restaurants and theaters and to ensuring the operation of public transport.

Travel and tourism businesses are furious at the impact of the new quarantine rules introduced on Monday that international arrivals require that they be isolated for two weeks. London Heathrow, Europe’s largest airport, he said on Thursday that “protection of first-line jobs is no longer viable”, as it reported a 97% drop in passenger numbers in May compared to the same month last year. It has already reduced management tasks by a third.

Travel and tourism are responsible for nearly 4 million jobs in the UK, or 11% of the workforce, and 9% of UK GDP in 2019, according to the World Travel and Tourism Council. He estimates that 1.2 million of these jobs could be lost in 2020 due to the pandemic.

The Brexit deadline is slow

Given the damage that Brexit will cause without an agreement, the economy is already on its knees, Britain can be left with no choice but to extend the deadline for trade talks. He has until the end of this month to submit such a request. Prime Minister Boris Johnson has repeatedly stated that he does not want to do that.

But the talks did not go well and were further complicated by the pandemic, which forced traders to rely on video conference. Michel Barnier, the European Union’s chief negotiator for Brexit, said last week that there had been no “substantial progress” since the start of negotiations and that the United Kingdom continued to pursue previous commitments.
Britain's largest companies cut tens of thousands of jobs. Millions more are at risk

David Frost, Brexit’s chief negotiator for the UK, said in a statement that “progress remains limited”, but insisted the talks were “positive”.

“If we have a political timetable that leads us to a brinkiness agreement in December that will be disastrous for British businesses – they will not be ready,” Fairbairn said.

The CBI submitted proposals for “economic recovery rich in jobs” in a letter to Johnson on Thursday. The group called on the government to prioritize the development of skills for young people, invest in the green economy and give immediate impetus to small businesses and those focused on high-growth sectors.

The OECD expects unemployment to reach 7.2% in Britain by the end of 2021, even if a second wave of infections is avoided and a trade agreement with the European Union enters into force. This compares with 3.9% at the end of the first quarter of this year.

– Charles Riley, Julia Horowitz, Luke McGee, Chris Liakos and Sebastian Shukla contributed to this exhibition.

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