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The impact of coronavirus on british businesses - Jochen Schaefer-Suren

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Coronavirus is a respiratory illness that originated in Wuhan, China, and as recent events have shown it is extremely difficult to contain. But essentially it is a strong form of the flu.

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The impact of coronavirus on british businesses - Jochen Schaefer-Suren

  1. 1. The impact of Coronavirus on British Businesses Jochen Schaefer-Suren Follow Mar 17 · 4 min read It’s fair to say that this topic is going to need to be revisited several times over the coming months as the situation appears to be worsening, and then changing, daily. Coronavirus is a respiratory illness that originated in Wuhan, China, and as recent events have shown it is extremely difficult to contain. But essentially it is a strong form of the flu. However, if we look at where we are now and where we know from studying what’s happened abroad will happen here, we can draw some conclusions about the impact of Covid-19 on British businesses. In general it’s fair to say that the actual medical threat to the country and the economy is far less threatening that the panic and hysteria in the media which has evolved. In fact to date only 6000 people have died worldwide over the last 3 three months when every year on average 100.000 people die every month from car accident. But as a result of the panic travel and tourism has been badly affected and major companies are bracing themselves for the fall-out. CEO of Hotels and Leisure Industry for Principal Real Estate
  2. 2. Europe, Jochen Schaefer-Suren, says that for hotel travel trade and leisure industry it looks bad as governments seem to have overreacted. The closing of borders by the US and European countries makes the cure worse than the disease. “Indeed only 5% of people infected needed to be hospitalised and these are especially older people over 70+ as well as people with underlying health conditions. So yes it is a health risk but not a reason to shut down whole countries which lead to much more severe economic damage as well as damage to people’s normal life” It’s not just the hotel and leisure industry that’s going to be hit hard by this virus. We’ve already seen it provide the final nail in the coffin of budget airline Flybe — although, in truth, that airline was already struggling for survival. It’s not just the big airlines though, the big airlines such as British Airways and Ryanair are experiencing a massive drop in bookings and cancelling flights as a result. Last week the airlines forced the competition watchdog to relax the rules stating that they had to fly 80% of their advertised flights, as so many of those flights were flying completely empty it was unsustainable (as well as being environmentally damaging). Elsewhere, a Norwegian airline has moved all its staff onto part-time hours for the foreseeable future and EasyJet is imposing a pay freeze on staff as consumer demand falls. The airline industry will definitely feel the results of this in their annual results announcements — as will the travel industry too. As well as fewer people booking holidays, and many people cancelling the holidays they’ve already booked, the coronavirus is also delaying the sales of major travel companies themselves. Saga, the specialist UK based over 50s travel group, has put the sale of one of its main companies, worth £100 million, Titan Travel, on hold as the fallout from the pandemic grows. Over this last week, global stock markets have all suffered their worst performance in more than a decade, plummeting to levels not seen since 2008’s Global Financial crisis. This prompted Donald Trump to announce a US$1.5 Trillion financial market support. Closer to home, the UK markets initially showed some signs of recovery after drawing down assurances from The Bank of England’s Mark Carney that financial institutions will bolster efforts to stem the economic effects of the virus. However, with more recent announcements of major sporting events in the UK cancelled including the Premiership and Football League matches for a month, the market is again showing signs of decline and there’s a genuine belief among economists and businesses that coronavirus could lead the global economy into a recession. The recent UK Budget and Bank of Engla dattempted to help to prevent this, by lowering interest rates from 0.75% to 0.25% and also by announcing a raft of measures designed
  3. 3. to boost confidence in businesses however, is it enough and will it have any effect? With cases of coronavirus rising, events being cancelled, and people staying at home more the economic outlook for industries like the tourism, leisure and hospitality industries is poor so confidence building measure by the government such as funding small and medium sized business to allow them to pay payroll etc are urgently required. Within the hospitality industry, with people staying at home restaurants and cafes suffer — and will even close temporarily, as is the case is in Italy. It’s also a problem coming up for the take-away industry too, with it becoming increasingly likely that all stores will have to close in the near future. Whether these companies can keep going through this, or whether this is in fact the death knell for significant numbers of small — and large — British businesses remains to be seen. The only thing we can be sure of at this stage is that the situation is going to get worse in the short term not necessarily for medical reasons but because politicians and the media have overreacted across the western world. Medium term like during the global financial crisis will be back to normal which I would expect will take 12–18 months Jochen Schaefer Suren Coronavirus Covid 19 British Business About Help Legal

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