Tiffany Carpenter, Head of Customer Intelligence at SAS UK & Ireland, offers her thoughts on how established banks can offer customers a better remote service.
Businesses have faced numerous challenges as a result of COVID-19; perhaps the greatest they have ever had to contend with. However, from a customer experience point of view, there have also been some new opportunities. Across the private sector, SAS research shows that the number of digital users grew 10% during lockdown, with 58% of those intending to continue usage. This represents a whole new dataset of customers with a digital footprint, offering the chance for businesses to engage with them in a more personalised way.
It seems that many businesses have been taking advantage of this already. Across the board, a quarter of customers noted an improvement in customer experience over lockdown. Yet, in the banking and finance industries, 12% of customers claimed that their customer experience had diminished, which was more than the average for the private sector.
What makes this particularly concerning for banks is that, as an industry, they are one of the most digitally mature. Of all the industries, they had the highest number of pre-existing digital users, with 58% of customers using an app or digital service prior to lockdown. So, the question is: why did the most digitally mature industry struggle to support all its customers through digital channels during the pandemic?
A truncated digital experience
As demonstrated by the sheer number of customers using their digital services and apps, the banking industry hasn’t struggled to get its customers to go digital. However, it has clearly struggled to support all of its customers during the pandemic.
While more customers noted an improvement in the customer experience over lockdown (27%), 12% still felt that it had got worse. Branch closures and lengthy call waiting times to speak to an advisor by telephone won’t have helped. In this age of digital transformation, customers were unable to access immediate support or advice through digital channels and were forced to pick up the phone or fill out paperwork to complete an action. Many businesses applying for bounce back loans found themselves in error-riddled, drawn-out processes, often waiting weeks with no status update, while customers wanting advice on payment holidays found their bank’s digital communication channels offered no support at all.
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Going the extra mile
Since the scheme was introduced there have been over 1.9 million mortgage payment holidays granted in the UK and, with stricter lockdown measures reintroduced, this number could rise even further.
The problem for banks and customers alike is that much of the decision-making process is manual, such as determining a customer’s eligibility. Automating these decisions would enable banks to deliver support and decisions in real-time to customer applications across their websites and mobile apps, eliminating manual back-end processing tasks and reducing the need for phone calls, paperwork or in-branch communication.
What’s more, automated decisioning does not require a complete overhaul of legacy infrastructure. Cloud-based intelligent decisioning applications allow banks to rapidly deploy solutions that can analyse customer data and behaviours in real time, determine customer intent and needs and arbitrate next best actions across digital channels without the need to rip and replace the current architecture.
While the pandemic remains part of our everyday life, it’s likely that banks will have to contend with sporadic branch closures and/or customers unwilling to either come in-branch for appointments or spend a long time waiting to speak to someone over the phone. Customer feedback has demonstrated that banks have the correct building blocks in place to deal with this effectively. However, they’re still struggling to support their entire customer base. If banks are to compete and succeed both in the short and long term, it’s essential that they complete the ‘last mile’ of their digital transformation.
Three of the UK’s largest supermarkets have committed to paying back hundreds of millions of pounds’ worth of savings made under a tax break for firms struck by the COVID-19 pandemic.
On Wednesday, Tesco was the first to announce that it would repay the UK government for £585 million in savings made under the business rate holiday following a unanimous decision by its board. “We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society,” said John Allan, Tesco’s chairman.
Tesco also defended its decision to take the government handout in the first place, which it described as a “game-changer” for their continued business during the pandemic.
Sainsbury’s and Morrisons followed suit on Thursday, declaring that they would hand back around £440 million and £274 million respectively. Like Tesco, they lauded the effectiveness of the government’s tax break in enabling them to operate through the pandemic; Morrisons CEO David Potts said that the measure had “enabled the whole sector to face squarely into the challenges and disruption caused by COVID-19.”
The UK government introduced the temporary tax cut in April, which was designed to cover retail, hospitality, nurseries and leisure in England. Similar measures were introduced soon afterwards for the rest of the UK.
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Supermarkets received public backlash for accepting the relief, as they were classed as “essential retail” and were therefore able to remain open during the worst periods of the pandemic, unlike many other firms that received support. Further criticism was levied against supermarkets for continuing to profit off sales of non-essential products, with Tales and Sainsbury’s also coming under fire for paying out dividends to shareholders.
High street fashion chain Bonmarché has entered administration, following on the heels of Arcadia and Debenhams on Monday and Tuesday. The chain operates 225 stores in the UK and employs around 1,500 staff.
Administrators said that the shops would continue to trade until further notice, adding that no redundancies or closures have yet been scheduled as the business looks for a buyer.
“Bonmarché remains an attractive brand with a loyal customer base,” said joint administrator Damian Webb of RSM Restructuring Advisory LLP, which was appointed on 30 November. “It is our intention to continue to trade whilst working closely with management to explore the options for the business.”
This marks the second time in a year that Bonmarché has entered administration, the first having come in October 2019. The chain was owned by retail tycoon Philip Day, whose other chains – Edinburgh Woollen Mill, Peacocks and Pondem Home stores – also collapsed into administration in early November.
Around 70,000 British retail jobs have been lost so far this year, according to the Centre for Economic and Business Research, and around 15,800 stores have closed. A good deal of this has been sparked by the COVID-19 pandemic and lockdown measures reducing customer footfall in city centres; the British Retail Consortium estimates that the month-long lockdown in England from 2 November to 2 December cost businesses around £2 billion in lost sales.
In Bonmarché’s case, however, troubles began before the global health crisis erupted. Its declining profitability has been linked to rising business rates and a general consumer shift towards online shopping.
Giles Coghlan, Chief Currency Analyst at HYCM, offers Finance Monthly his insight on the possible impact the Biden administration will have on the markets.
The 2020 US Presidential election has produced what now seems to be a clear result: Joe Biden will be the next President of the United States. Interestingly, during the same week as the election, Pfizer announced that their COVID-19 vaccine was 90% effective, precipitating a major market rally as a result. Any market shifts that came a result of Biden’s victory were amplified by the positive market response to this pharmaceutical development.
However, it’s still worth considering what a Biden presidency means for British and American investors. COVID-19 won’t occupy the entirety of the Biden administration’s tenure, and the huge policy divergence between Joe Biden and Donald Trump means that we’ll undoubtedly see the financial markets reacting differently in the years ahead.
So, with this in mind, there are certain aspects investors could consider following Biden’s election victory. Although it’s still too early to make any concrete forecasts, especially with control of the Senate hanging on Georgia’s run-off elections, there are still important observations that can be made.
Checks and balances
Although the upcoming Georgia run-off senate race is being hotly debated within the US media, the reality is that Republicans will almost certainly retain control of the senate throughout the Biden Presidency.
For investors, this may represent great news. Analysis of all Presidential scenarios since 1945 reveals that a Democrat president governing with a split congress generated, on average, the best average annual returns for the US stock market – nearly 14% in dollar terms - according to UK firm Quilter Cheviot.
The reasoning behind this comes down to constraining what the President can accomplish. A split congress, as Barack Obama discovered in his final two years in office, can mean that much of what a President attempts to deliver is quickly impeded by filibusters and congressional obfuscation. This is especially the case in the senate.
Although the upcoming Georgia run-off senate race is being hotly debated within the US media, the reality is that Republicans will almost certainly retain control of the senate throughout the Biden Presidency.
But what could a split Congress mean for Biden? Ultimately, it might constrain his ability to introduce larger economic support spending, health or tax reforms, and climate-related legislation. Stocks and assets that performed well during the last four years would, in this scenario, largely continue to perform well. However, if Biden manages to clinch control of the Senate, how would his ambitious plans impact the markets?
All about tax
Trump’s most impactful economic policy, by far, was the cutting of the US corporate tax rate from 35% to 21%. Investors, traders, and CEOs all benefited massively from this, which is part of the reason why the Dow Jones has been making steady gains during Trump’s presidency.
Biden’s tax plan, increasing the corporate tax rate to 28%, would be seen as a huge blow to many US businesses. Although still 7% shy of the tax rate in place before Trump took office, many of the companies listed on the benchmark S&P 500 index could see their margins shrink if such tax reform was implemented.
The biggest winners from the Trump Tax cut, including AT&T, Hilton Worldwide, General Motors and Walgreens Boots Alliance, would all be hit hard from this shift in tax policy. Whether Biden is successful in enacting his envisioned tax reform, however, is still yet to be decided.
Technology on the horizon
The performance of technology stocks this year has been keenly observed by investors and traders. We’ve seen Apple become America’s first $2 trillion-dollar company and the working-from-home revolution facilitate a surge in remote-working shares, including Slack, Zoom, and Amazon.
A tech sell-off has already begun in reaction to Pfizer’s aforementioned vaccine development, but would this accelerate upon Biden moving into the White House? Democrats like Elizabeth Warren have vowed to do everything in their power to break up Amazon, Google and Facebook via anti-trust regulations; a move that could see millions of dollars of value wiped in an instant for these companies.
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Depending on whether Biden shares the ambition of his Democrat colleagues in this regard could facilitate a huge shock for investors in US technology. Those who own stock in, for example, Facebook may have to decide between keeping their shares in the core Facebook product or, alternatively, Instagram if a break-up of the company goes ahead. Although action of this kind is definitely more likely to occur under a Biden presidency, we will have to wait and see whether this transpires.
Preparing for 2021
In general, then, investors should be closely following US political developments if they own shares in any American-based companies or major stock indices such as the S&P 500. If Joe Biden is successful in the Georgia senate run-off elections, then it’s possible that many of his more ambition plans may be attempted, leading to huge ramifications across numerous asset classes.
The immediate reaction would likely be a large initial surge in US stocks in anticipation of a larger US stimulus package. Alternatively, a Democrat President and Republican Senate will likely facilitate much more political compromise in American politics, which itself guarantees a certain level of economic certainty that, subsequently, will allow financial markets to grow and grow.
So, in many ways, with the large amount of fiscal stimulus, QE, low Fed interest rates, and willingness for the US to take on debt, I believe the US stock market should ultimately benefit either way in the medium to longer term. We are in an age where fiscal conservatism is dying and that should boost US stocks over the next Presidential term.
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UK high street mainstay Arcadia – owner of Topshop, Miss Selfridge, Dorothy Perkins and other major brands – entered administration on Monday.
Arcadia was the biggest concession operator in Debenhams, which is currently in administration. Shortly after the announcement of the firm’s collapse, JD Sports – the last remaining bidder for Debenhams – pulled out of talks despite having been close to securing a deal as recently as the end of last week.
Debenhams will now be wound down. It currently operates 124 UK stores and has cut 6,5000 jobs since May; the remaining 12,000 jobs are now at risk.
Both retailers have been hit hard by the COVID-19 pandemic and a loss in customer footfall in city centres.
Arcadia’s collapse had been expected after the chain failed to secure a rescue loan of £30 million. It operates 444 stores in the UK and 22 internationally, and currently has 9,294 employees on furlough. The company’s collapse puts a total of 13,000 jobs at risk.
Arcadia has hired administrators from Deloitte and announced that its stores will continue to trade as options are considered. All orders that were made over the Black Friday weekend will also be honoured.
“We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses,” said Deloitte joint administrator Matt Smith.
FRP Advisory’s Geoff Rowley, a joint administrator to Debenhams, said that administrators “deeply regret” the decision to close the company, which was forced by current business circumstances.
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“All reasonable steps were taken to complete a transaction that would secure the future of Debenhams,” he said. “However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.”
Debenhams will continue to trade to clear current and contracted stock, then close.
Taxes have always been a bit of a confusing matter for many people – now more than ever, due to the impact of COVID-19 on tax. There are so many things that can be overwhelming when it comes to taxes, such as which bracket you fall into, whether you need a UTR number, and many more.
One of the main things that confuses people is the fact that there are so many different types of tax. It can be hard to know whether you need to pay tax, and even once you know that, you may be unclear on what type of tax you need to pay.
There are various lesser-known types of tax, such as tax when you travel, or tax for gambling winnings, but in this post, we’ll be focusing on three of the most common types of tax: income tax, consumption tax, and property tax.
Income tax
This is the type of tax that tends to cost people the most. As the name suggests, income tax refers to compulsory money you need to pay to the government for any income earned. Keep in mind that this doesn’t just refer to money you earn form your business or job, but other forms of income as well.
There is usually a minimum income required in order for you to have to pay taxes, so if your income falls below this threshold, you might be exempt from paying. There are also various income brackets, which means the more you earn, the more taxes you’ll need to pay.
Consumption tax (VAT)
Consumption tax, also known as VAT, is the tax we pay on most of the products or services we buy. This varies from place to place. In the UK, the standard rate for consumption tax is 20%. This is the type of tax we encounter most often, since most people will pay VAT on nearly a daily basis.
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While the majority of goods and services will require you to pay consumption tax, there are a few that are exempt. These differ depending on where in the world you live. Some places don’t charge VAT on what is viewed as basic necessities, and instead only charge for items viewed as luxuries. In the UK, for instance, insurance is exempt from VAT.
Property tax
Property tax refers to money that is levied on real estate. The way that property tax works is dependent on where you live. In some areas of the world, you only need to pay property tax on a property when you buy it and it is over a certain value. Generally, property tax is taxed annually.
Property tax is the responsibility of the owner of the property, which means that renters are not liable to pay property tax, although a portion of their rent will probably be used towards it. If you don’t pay your property tax, your house could get taken away from you, so it’s important that you pay the amount that you should, and that you pay it on time.
Well, the good news is that as the year draws to an end, there are plenty of great deals to be had for a variety of reasons. Anyone who wants to get a great deal when it comes to their new vehicle will find that this time of year is a great chance to get some fantastic 2020 car deals. In fact, 2020 car deals could be a golden opportunity in the US for those who want to purchase a new vehicle.
There are many reasons why you may be looking to get a new vehicle at this time of year. Some people are looking forward to starting the New Year off in a nice new car that is perfectly suited to their needs. Others want to upgrade their vehicle and benefit from the great deals at this time of year, while some may be investing in their first car. Whatever the situation, this could be a great chance for you to get the perfect car for your needs without breaking the bank.
Shopping Around for the Right Deals
It is, of course, important that you shop around to find the best deals on a new car, as they can vary from one dealership to another. Make sure you do not just snap up the first deal you come across, as there may be better ones out there, so you need to put in some research. By doing this, you can ensure you find the best vehicle at the best price, and that you get a great deal when it comes to things such as getting finance.
The good news is that you can do this with ease online, so finding the best deals is nowhere near as difficult and time-consuming as it once was. You can even email dealerships to see which of them can provide you with the best driveaway deal, as this is a very competitive market, and many will be willing to be flexible with regard to costs and terms. So, make sure you avoid rushing into any decisions, and be certain to put some time and effort into finding the very best deals.
One other thing you need to keep in mind is the running costs involved for the vehicle you purchase. While the initial price is important too, you need to make sure you look at how much you will need to pay when it comes to repairs, filling up the tank, and even finding the cheapest auto insurance. So, make sure you take all of this into consideration when you are looking for the ideal vehicle among the end of year bargains available.
While the initial price is important too, you need to make sure you look at how much you will need to pay when it comes to repairs,
Why Are Great Deals Available?
So, why are there so many great deals available on 2020 cars at this time of the year? Well, there are many reasons behind this, and a lot of people are eager to snap up vehicles at this time of the year because of these reasons. Some of the reasons there are great deals available include:
Great Financing Deals
One of the reasons why this is such as great time of year for new car purchases is that dealerships often provide access to very attractive finance deals, and this is to entice people to make purchases of 2020 cars as the year draws to an end. Of course, the fact that fewer people have been going to showrooms this year due to the global situation means that dealerships are under even more pressure than usual to try and make deals more appealing to drivers. So, this year you could be especially lucky when it comes to bargain vehicles.
Selling 2020 Stock
Another reason why this is a great time to get excellent deals on 2020 year cars is that dealerships are getting themselves ready for the next models for 2021. Naturally, in order to do this they need to shift as much of their 2020 stock as possible, and in order to do this they are prepared to offer some very attractive deals to motorists.
Achieving Sales Targets
Of course, every dealership salesperson has their sales goals and targets on their minds, but never more so than at this time of the year. This is often their last chance to boost their figures and get that bonus next year, so they will go out of their way to secure more sales. For drivers, this means being able to access some great deals and save a lot of money on the cost of buying a 2020 car.
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A Time for Special Offers
This is the time of year that has become known for special deals on cars, so this is one of the reasons why it is a great time to purchase a 2020 vehicle. However, it is also a time of the year when people who bought cars previously on a three-year lease come to the end of the lease. Salespeople at dealerships want to make the most of this situation by offering tempting deals to those who may now be looking to buy a vehicle as their lease nears its end.
Ahead of the Sales Slump
As most people know, January and February can be very difficult months financially following the Christmas splurge. In addition, many people get the January blues and don’t want to start doing things like hunting for cars. Both of these situations can cause a slump in sales for the first couple of months of the year, which is obviously bad news for dealerships. Many try to counteract this by boosting sales before Christmas, and this is achieved by offering great deals.
As you can see, there are lots of reasons why this is a great time to get the best deal when it comes to buying a 2020 car.
Arcadia, the UK-based retail group owned by billionaire Sir Philip Green, is set to enter administration imminently, according to the BBC.
Questions over the future of the retail empire were raised on Friday as it emerged that Arcadia had failed to secure a £30 million loan from potential lenders. A spokesperson said at the time that senior leadership were “working on a number of contingency options to secure the future of the group’s brands”.
Rival retail company Frasers Group, owned by billionaire Mike Ashley, said that it had offered Arcadia a £50 million loan to save it from collapsing and was “awaiting a substantive response”. Sources among Arcadia’s senior staff told the BBC they do not expect a last-minute rescue deal.
Arcadia owns several major high street retailers and brands including Topshop, Miss Selfridge, Dorothy Perkins, Wallis and Evans. It has struggled in recent years with a shift in consumer activity from city-centre businesses to online retail, and has acknowledged that the COVID-19 pandemic in 2020 had “a material impact on trading” across its brands.
The retail group operates over 500 stores across the UK and employs around 14,500 people, whose jobs will be at risk should the company enter administration.
Shares in some of Arcadia’s rivals rose on Monday in response to news of the company’s probable insolvency. Next gained 2.8% on forecasts of weakened competition on the high street, and JD Sports rose 6.5% on predictions that it may choose to drop its proposed purchase of Debenhans.
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Online fashion retailer Boohoo, which may be interested in buying Arcadia-owned brands such as Topshop, gained 5.5%.
Frasers Group on Monday also said it “would be interested in participating in any sale process” of Arcadia’s brands should they be sold off.
Neglecting your insurance can be the difference between protecting your assets or paying out of your own pocket.
An insurance broker’s duty is to advise and educate clients about the coverage offered, and why the coverage details are more important than selling price. And this is especially true for high-net-worth clients. Brokers must recognise that these clients are not just high-profile and wealthy, but that they are individuals with multiple interests, involved with many different types of business ventures and non-profits outside of their primary carrier. Brokers should research who a new prospective client is, what they do, who are they associated with, and even look at their social media accounts to get a better understanding of what type of insurance they will need. When a broker can comprehend their client’s lifestyle, career, and aspirations, they will better connect with the client.
There are always challenges when dealing with high-net-worth individuals. In the last five years, many of the personal lines insurance markets have tightened up their underwriting guidelines making it more difficult to place policies. California alone has gone through drastic changes due to the recent wildfire history. Homes that carriers once considered “favourable risk” are now being declined by underwriting due to the of location (wildfire/brush exposure), year built, maintenance of the home, or whether the home meets current earthquake building codes. Underwriters are also looking at the insured’s profile. An insured’s involvement with certain business ventures such as marijuana, any recent negative press, and even the size of their social media presence may all play a factor in the carrier’s decision to offer coverage. Social media is a big part of today’s society and having a big following can determine approval on liability. Unfortunately, all it takes is one bad post for a high-profile individual to receive significant negative press. And sharing the wrong information may, justly or not, lead to legal action and a resulting claim.
Brokers are adapting to this changing market, and strategically placing coverage with non-admitted carriers such as Lloyds London, Scottsdale, and AZGUARD. When placing coverage with these carriers, the broker must keep in mind the differences in coverage between an admitted carrier (e.g. AIG, Chubb, Cincinnati, Pure) and non-admitted carriers. For example, in California, an admitted carrier can offer workers’ compensation for household employees while a non-admitted carrier cannot. Moreover, an admitted carrier can offer broader endorsements such as Guaranteed Replacement Cost, Agreed Value, and higher limits for Water/Sewage Back-Up and Mold. A broker must understand all these differences and evolve with the markets to help make sure our clients are insured properly.
Since the beginning of the COVID-19 pandemic, the personal insurance industry has gotten busier. Many high-net-worth individuals now have the time to review their insurance policies, understand their coverage, and depending on their financial situation, figure out ways to save money or help better protect themselves by adding coverage.
Since the beginning of the COVID-19 pandemic, the personal insurance industry has gotten busier. Many high-net-worth individuals now have the time to review their insurance policies, understand their coverage, and depending on their financial situation, figure out ways to save money or help better protect themselves by adding coverage. With the rapid shift to tele-work, some insureds are reconsidering the location of their home. It may no longer be worth paying an insurance premium equivalent to a mortgage if their location no longer provides the benefits it once did. Every situation is different. Momentous Insurance Brokerage is a full-service brokerage dedicated to providing the highest calibre of insurance and risk management consultation. Our strength and focus are providing insurance and risk management solutions to high net-worth individuals, executives, and celebrities. We understand the day-to-day urgency, complexity, and confidentiality issues that surround our clientele. Innovative, out-of-the-box thinkers, we go above and beyond to protect our clients’ assets and offer concierge services that are beyond compare.
Several large high street stores have decided not to participate in Black Friday sales, even as spending is set to soar in the UK this year.
Next, a late adopter of Black Friday sales, saw great success in previous years with high demand for its discounted clothes, furniture and homeware, but this year has decided to avoid levying similar discounts. The move comes after the retailer reported that its in-store sales had been badly affected by the COVID-19 pandemic and loss in customer footfall, down to half of volumes seen in 2019.
Marks & Spencer also confirmed that it would not be offering any “specific Black Friday deals”, in keeping with a pattern that it has set in previous years. Instead, it will “focus on offering great value and deals throughout the whole festive season” – a line echoed by homeware chain Wilko, which said it intends to offer “great value products at great prices every day” rather than implementing Black Friday discounts.
Discount chain B&M linked its decision not to offer Black Friday sales to the dangers of the COVID-19 pandemic. A spokesperson said that their strategy of season-long sales “avoids excessive crowds on any one day”.
Black Friday is often seen as a key trading day in the lead-up to the Christmas period, with many traditional and online retailers treating it as the unofficial beginning of end-of-year holiday sales.
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Lloyds Bank expects Black Friday spending in-store to hit $750 million this year, up from £718 last year, though 2020’s longer sales period and greater overall retailer participation make it difficultl to draw comparisons with previous years.
More than two-thirds of shoppers have delayed a purchase in anticipation of finding a bargain during the sale, according to Lloyds.
The Walt Disney Company said on Wednesday that it would cut 32,000 jobs, primarily in its Parks, Experiences and Products division, in the first half of its fiscal year for 2021 – meaning by March.
The entertainment titan’s plans to terminate “approximately 32,000 employees” was revealed in a pre-Thanksgiving filing with the US Securities and Exchange Commission. The company had previously revealed plans in September to lay off 28,000 staff at its theme parks, which have been drastically affected by the COVID-19 pandemic and resulting lockdown measures.
"Due to the current climate, including COVID-19 impacts, and changing environment in which we are operating, the company has generated efficiencies in its staffing, including limiting hiring to critical business roles, furloughs, and reductions-in-force," Disney said in its SEC filing.
Disney’s theme parks division has been the hardest-hit by the pandemic, losing around $2 billion in operating income in the quarter ending June 2020. Florida’s Walt Disney World and California’s Disneyland were among the venues forced to close as initial lockdown measures were put in place, and while some have been reopened at a reduced capacity, others – like Disneyland – have reclosed or been forced to remain shut.
The filing also referenced losses in other segments of the company, reaffirming the temporary closure of its retail stores, and the suspension of its cruises and stage plays.
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Disney was also forced to halt television and film production for the majority of the year, contending with higher expenses and slower production when work was resumed, the company said. It warned that its income may continue to decline even after the full recommencement of its business, owing to “the economic downturn caused by COVID-19” reducing consumer appetite for its goods and services.
Overall, Disney’s operating income in the year to 30 September was $8.12 billion, a 45% slump year-on-year. Revenue from its Parks, Experiences and Products division was also down by close to $7 billion compared to last year’s figures, with half as many theme park tickets sold.
While delivering the government’s spending review for 2020, UK chancellor Rishi Sunak cautioned that the “economic emergency” caused by the COVID-19 pandemic was just beginning.
“Our health emergency is not yet over and our economic emergency has only just begun,” he said, adding that his priority was to “protect people’s lives and livelihood”.
The chancellor’s warning came as the Office for Budget Responsibility estimated that the UK economy will contract by 11.3% by the end of 2020, the country’s largest recorded fall in output for 300 years. Unemployment is also expected to peak at 2.6 million in 2021 and remain above pre-pandemic levels until 2024 at the earliest.
Chancellor Sunak said that departmental spending would be £540 billion next year, up 3.8%. He also promised a “once in a generation investment in infrastructure” towards schools, hospitals and roads, which the government would spend £100 billion on next year. £3 billion in additional funding will be earmarked for the NHS. Government borrowing will rise to almost £400 billion, reaching its highest level outside of wartime, to finance these projects.
The government’s foreign aid budget will also be cut, and there will be a “targeted” pay freeze on public sector workers, the chancellor said, from which the NHS and lowest paid workers will be exempted.
In other news of note from the spending review, the chancellor said that he had accepted the Low Pay Commission’s recommendation that the minimum wage – now rebranded as the National Living Wage – be increased by 2.2% up to £8.91 per hour. It will also be extended to those aged 23 and over, down from the current age of 25, and the minimum age for younger workers will be increased as well.
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"The chancellor will need to find £20 billion to £30 billion in spending cuts or tax rises if he wants to balance revenues and day-to-day spending, and stop debt rising by the end of this parliament,” noted Richard Hughes, chairman of the Office for Budget Responsibility, following the spending review.
