2020 was a challenging year for businesses and citizens alike, and although there is some cause for optimism in 2021, it will probably be fraught with financial difficulties.
Lockdowns, societal norms, and legal restrictions imposed by the UK Government resulted in a veritable tidal wave of instability. As a result, cash flow problems are cropping up left, right, and center, and a vast amount of businesses are experiencing financial distress. Under these circumstances, just about the only thing that remained certain is that good London accountants‘ counsel is more important for companies than ever before.
There is a hope that some of the worst aspects of 2020 could finally be put to rest with mass vaccination being rolled out. However, access to quality financial advice will be critical for companies during the upcoming year as well.
Hospitality Industry is in Shambles
2020 was not kind to accommodation providers and restaurants. Almost eight thousand of them closed down business permanently, and the rest are still struggling. Even the ones that survived thus far are not out of the woods yet, because even as lockdowns are lifted, social and legal restrictions will remain in place.
Social distancing practices and general economic stagnation is expected to continue being a severe issue for the hospitality industry in 2021. As a result, industry experts and accountants alike speculate that many venues will have to fight an uphill battle to break even in Q2.
Small Businesses Are Struggling
Nearly fifteen thousand small and medium-sized retail stores closed in 2020, the number being about five hundred higher than the previous year. However, that total alone doesn’t tell the whole story – although the number of closures was just 3% higher year over year, the jobs lost due to those closures jumped by a staggering 30%.
This could be interpreted as a sign that more medium-sized stores with more employees buckled under the pressure and had to shut down for good. But, unfortunately, with footfall dramatically reduced and customers hanging tight to their wallets, even more small and medium-sized stores will likely share the same fate.
There are quite a few steps that could improve a small business’s chances of making it through these fraught times. First, enlisting professional accountants to help with cash flow management, devise business strategies, and apply for government support programs.
Large Retail Chains & Deliveries Are Flourishing
Not all of the retail industry has been affected by the advent of COVID-19 in the same way. Large retailers, especially those who had already made a name for themselves for offering delivery services and not just on-site shopping, have thrived these last months.
Companies who offered deliveries on non-essential goods have also flourished, as the lockdowns suppressed on-premise supply, but not societal demand of their wares. So while fashion and jewelry stores that have traditionally been brick and mortar venues have struggled, online toy stores, for instance, have been making a killing.
Now, with lockdown measures easing up, accountants expect that the scales will balance out a bit. Citizens are expected to gradually return to their usual places of custom rather than continue shopping online. Unfortunately, how long that process will take and how the retail industry will look in a couple of months is still anyone’s guess.
Landlords Took a Hit
The anti-eviction measures implemented by the UK government eased the burdens of renters nationwide, only to put that same strain on landlords’ backs. It is estimated that the total sum of unpaid rent for the whole of 2020 and the first half of 2021 could easily reach above seven billion pounds if trends endure.
Naturally, the overall situation is not as simple as that, with many other factors contributing to the rent crisis. Still, one thing’s for sure – 2020 was not a good year for landlords, and accountants don’t expect 2021 to be much better.
Warehouse & Storage Lenders are Thriving
In 2020, many companies found themselves suddenly needing to incorporate online services into their business strategy. However, others still ended up needing to improve their infrastructure to accommodate the influx of new customers.
Unsurprisingly, lending in-demand properties to well-paying customers has proven very lucrative. It is unclear whether the demand for storage space will persist in perpetuity, but with so many companies focusing their efforts on online sales and delivery, it just might.
Stamp Duty Holiday Continues
People who were looking to change their lifestyle and invest in real estate, as well as housebuilders, took advantage of the UK Stamp Duty Holiday. The cut on taxes on acquiring property has been extended to the end of June 2021, giving even more people the opportunity to purchase property at a significantly reduced cost.
The stamp duty holiday has effectively ensured that the real estate industry has remained vigorous throughout this pandemic. Real estate agents and accountants expect that things returning to normal will take the wind out of the industry’s sales. Still, whether or not that will happen and when remains to be seen.