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Prospects for a V-shaped recovery look bleak

Research, by accountants Deloitte, has found that almost two thirds of companies are planning to cut investment spending over the next three years due to Covid-19. It also appears that most are planning for a slow recovery that will not see the economy recover until well into 2021.

Companies are expecting their revenues to fall this year, but also to do so next year as well. Only 49% expect a return to pre-Covid-19 levels by the end of the second quarter of 2021.

Make UK, the body representing manufacturing and engineering companies, has added to the gloom. It has warned that the industrial sector is facing a wave of job losses, unless further action is taken by the Treasury to extend help into next year.

It’s called for the government to retain the job retention scheme for specific industrial sectors, in order to avoid job losses among highly skilled workers.

Chancellor Rishi Sunak, who is planning to end the furlough scheme in October, is said to have had a ‘good crisis’, splashing the cash to support the economy. His latest efforts – bonus payments for companies retaining staff on furlough and giving people cash off eating out - have not been so well received.

With a growing number of manufacturers planning redundancies, almost a third are looking to make between 11% and 25% of employees redundant, the recent £30bn allocated by the government would probably have been better spent extending the furlough scheme to key strategic sectors.

Why? Well, these sectors are not only having to struggle with Covid-19, they will also have to contend with a botched no-deal Brexit and a deteriorating global situation - a perfect storm.

But I suppose £10 off your lunch is better than nothing…..just!

Neil Tyler

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