2020 Innovation – Business News Update – The Economy

As part of 2020’s commitment to its members by providing online training for accountants in practice, we have provided a Business News Update for our members.

This week we have
seen some gloomy economic figures showing that the UK suffered a record annual
slump in 2020. Last year the economy shrank by nearly 10% as coronavirus
restrictions hit output, stated the Office for National Statistics (ONS).

On the positive
side, The Bank of England chief economist Andrew Haldane has commented that the
UK economy is like a “coiled spring” and that consumer confidence would surge
back thanks to the vaccine programme. It is clear to us that the eventual
lifting of restrictions will lead to a rebound of growth, we just do not have a
timeline from the Government who are now remaining cautious about making
announcements following many changed decisions and U-turns last year. If the
vaccination continues at its current level then we can all take comfort that
for this year we have hope of a return to some kind of normality.

This year’s budget
will take place on the 3 March and we will keep all our clients up to date with
any changes announced. We cannot predict exactly what the Chancellor will say
but the two big questions are how the UK will pay off the Government spending
to deal with the pandemic and how they will continue to support the hardest hit
in our economy. The Government could increase taxes to raise money, but this
goes against their manifesto pledge in 2019 and they might argue the pandemic
changed so much that they will be forced to do so. The alternative is to reduce
government spending, or we may see a combination which we think is the most
likely scenario.

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