Yesterday’s GDP numbers showed a wee uptick in June, but we’re all still expecting jobs to keep bouncing down the rocky hill for a long while yet. Some of the reasons are obvious -end of furlough, second wave- but, in case of interest, some of the other less obvious ones: (1/6)
1. JRS/loans were designed for firms facing immediate loss of demand. But a bunch will experience a lag eg. The visual effects artists still able to work on film shot over Winter over Spring. But once processed, there’s nothing new to work on & help is less useful/withdrawn (2/6)
On a larger scale is fashion. There’s a debate raging about the wasted stock that was never sold this Spring. Reselling in Spring 2021 would strip work from fashion designers and manufacturers. One solution to drag it out rather than create new gap (3/6) drapersonline.com/news/is-covid-…
2. Summer is growth season for the sectors coronavirus hit hardest. Tourism, hospitality & leisure start to rise from March and make their money from there until September. If pubs and zoos can’t make up the 3 months they lost in lockdown, some will collapse over winter (4/6)
3. Debt. If you’ve essentially remortgaged your business to pay rent etc. securing board confidence/credit to borrow to hire and grow again will be tough. Any pre-COVID investment that was paused has to be totally re-calculated. And like... all non-IT investment was paused (5/6)
Plus the moment you have to start repaying on these loans - coming just as VAT rises, as business rates have to be paid again, and as price of EU trade increases - you have to re-evaluate your higher cost base against where income has settled. Next Spring real danger moment (6/6)
PS. It does appear that the job change has not kicked the Bad News Fairy off this timeline.
