As Government Enforces Lockdown, 800,000 Businesses in UK at Risk of Going Under
The COVID-19 pandemic has been the biggest blow to the economy since the 2008 recession, and many fear that its effects will echo around the world for years to come.
As the global death toll rises, the UK prime minister has advised all residents, especially those with compromised immune systems, to practice social distancing to prevent the disease from spreading and causing more havoc.
As a result of this nation-wide lockdown, more than 800,000 small businesses have been deeply affected, having to face a drop in demand and even having to lay off employees to keep them safe.
The Federation of Small Businesses has recorded a total of 5.8 million registered businesses in the UK, 800,000 of which are brick and mortar stores in the retail and entertainment industries.
For almost a million of these small businesses and a workforce of 6 million, this could be a major hit, especially since the losses will not be covered by insurance.
With the 12-week self-quarantine instructions by Boris Johnson, businesses are slowly coming to a screeching halt, as people steer clear of public places including bars, restaurants, gyms and shops.
Economists fear that this social fear could lead to many businesses shutting down for good if they aren’t given immediate help to combat the current circumstances.
Probably the worst sector to be affected is that of bars and pubs where hundreds of thousands of employees have been laid off indefinitely. The Prime Minister is confident that businesses will reopen as usual but it will be many months before people shed their fear of catching the virus and start reclaiming public spaces.
Till then, small businesses are in dire need of funds to cover their fixed costs whereas laid-off workers are facing unprecedented financial circumstances.
While the Prime Minister advised the general public to stay indoors for 12 weeks, there haven’t been any clear instructions for businesses to close down meaning that they can’t tap their insurance plans for any loss of income during the quarantine period.
Most insurance companies offer an interruption cover for small businesses in case of a natural disaster, but this type of insurance does not cover loss from forced closures by the government.
Companies who don’t have the correct insurance to cover them during this difficult time are demanding that governments pay cash in order to help cover some of the losses.
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