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Markets responding positively to government support measures

Markets responding positively to government support measures
March 24, 2020 Amy Cooper
UK Houses of Parliament

The recent market downturn is to be expected during the current circumstances, and we understand that many of you are concerned about the impact that COVID-19 is having on investments. However, with the markets responding positively to government measures put in place to support the economy, now is not the time to panic, as George Square Financial Management explains.

Significant measures put in place

The Bank of England has taken substantial steps to help the UK’s economy withstand the COVID-19 pandemic. After initially dropping the Bank’s base rate to 0.25%, it has now gone a step further and cut rates to a record low 0.1%, helping to ease the pressure on borrowers during this time of uncertainty.

In addition, quantitative easing (QE), a tool that central banks can use to inject money directly into the economy, has been increased by a further £200bn in a bid to help keep long term interest rates down as well as boost spending and investment.

Additional measures

Other measures put in place to help combat the economic disruption felt by businesses include:

  • Coronavirus Business Interruption Scheme loans will now be interest free for 12 months rather than the 6 months initially suggested. The Scheme offers loans of up to £5 million for SMEs through the British Business Bank.
  • Q1 VAT payments from 20 March 2020 will be deferred until 30 June 2020. Businesses will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during this deferral period.
  • For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. No penalties or interest for late payment will be charged in the deferral period.
  • Small business grant funding of £10,000 for all businesses in receipt of small business rate relief (SBRR) or rural rate relief.
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.
  • All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay.
  • A Statutory Sick Pay relief package to be made available for small and medium sized businesses (SMEs).
  • The introduction of a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England.

Weathering the storm

It is understandable that people are concerned about the impact that COVID-19 will have on their investments. But, with the markets responding to the measures already being implemented, we encourage you not to panic or make hasty decisions.

Please be reassured that both the Government and central banks are prepared to take significant steps to ensure the economy can function during this turbulent time.

History and experience have taught us at George Square to stay strong and patient, and that the markets will correct themselves in due course.

What to do if you are worried about your investments

For advice and assistance about your own specific circumstances, please feel free to get in touch with one of our experienced financial advisers for information and support.