Coronavirus: The week at a glance
The coronavirus pandemic has transformed life as we know it in just a few weeks, and the situation continues to evolve rapidly. Many households will be adapting, not just to this new way of living, but to untold financial disruption and future uncertainty.
This week, changes were made to the conditions around furlough, the numbers of universal credit applications continued to rise and the Chancellor admitted there are “tough times” ahead, with the economy predicted to shrink by as much as 35% and a further three weeks of lockdown on the horizon.
Here’s a recap of the key announcements that could have an impact on your finances in the coming months…Get free advice
The UK will stay in lockdown for another three weeks
In an announcement on 16 April, Secretary of State Dominic Raab confirmed that the existing coronavirus lockdown will continue for “at least” a further three weeks.
He stressed the importance of keeping lockdown restrictions in place, saying, “There is light at the end of the tunnel but we are now at both a delicate and dangerous stage in this pandemic.
“If we rush to relax the measures that we have in place we would risk wasting all the sacrifices and all the progress that has been made.
“That would risk a quick return to another lockdown with all the threat to life that a second peak to the virus would bring and all the economic damage that a second lockdown would carry.”
Although there has been news that hospital admissions are declining, UK Chief Advisor Sir Patrick Vallance stressed that the number of deaths would plateau for two or three weeks before falling.
The furlough cut-off date has been extended
This week the UK government announced that the furlough cut-off date has been extended to 19 March. It’s hoped this update to the eligibility criteria will give thousands of people a second chance at furlough.
When the coronavirus job retention scheme was initially introduced by Chancellor Rishi Sunak, employees had to have been on their company’s payroll on or before 28 February to be eligible for the support. But this date has now been extended to allow as many people as possible to apply.
The coronavirus extension scheme entitles employees to 80% of their wage or up to £2,500 per month, and is expected to be fully operational by next week.
Universal Credit applications soared
Since the official announcement on 16 March, it’s been revealed that 1.4 million people have applied for Universal Credit. Dominic Couling, a civil servant at the Department of Work and Pensions, has confirmed this week that although new claims have slowed, they’re still running at “two or three times the level of a normal day”.
The catch-all benefit is designed to support those with low incomes, as well as the unemployed and those who’ve had to take time away from work due to illness. At this time of national crisis, many workers who have been made redundant, along with the self-employed, have found themselves applying for the benefit for the first time.
The government has also introduced measures to make it easier for those who are self-employed to apply for the benefit. Anyone who applies for Universal Credit will now be able to use their existing Government Gateway account (providing they’ve used it to access their personal tax accounts in the past 12 months) to verify who they are, which will speed up the process of making a claim, and lessen the strain on benefits staff.Get free advice
OBR report findings were announced
On 14 April, the findings of a report conducted by economic forecaster the Office for Budget Responsibility (OBR) were announced.
The investigation into the potential impact of the coronavirus on the UK economy highlighted that:
- The UK economy could shrink by as much as 35% this spring
- More than 2 million people may face unemployment
- GDP could plummet by 13% in 2020 overall, and by a third in Q2.
- Joblessness could reach 10% by July.
The OBR projections were based on a scenario in which a strict lockdown continues for three months, and is then partially lifted in the three months that follow.
In a daily press briefing on Tuesday, Chancellor Rishi Sunak concluded that “The scale of what we are facing will have serious implications for our economy here at home”, and conceded, “we’re facing tough times.”
However, he also stressed that health comes before everything else, saying, “Right now the single most important thing we can do for the health of our economy is to protect the health of our people.”
FCA measures came into full effect
Over the past few weeks we’ve seen banks and mortgage owners promise to show “forbearance” to consumers given the extraordinary circumstances of the COVID-19 outbreak, and the introduction of the concept of a payment holiday.
A further range of temporary measures announced by the Financial Conduct Authority came into full effect on 14 April for consumers who have been negatively impacted by coronavirus, including:
- Temporary payment breaks on loans and credit cards
- Up to £500 overdraft charged at 0% interest over the next three months
- Making sure overdraft customers are no worse off on price compared to the prices they were charged before these measures
- Making sure customers using any of these measures will not have their credit rating affected.
While these measures have been designed to provide temporary relief from having to make payments, it’s important to weigh up the long-term impact on your finances that a payment holiday might have.
If you are requesting an overdraft of up to £500 from your bank, or a payment holiday, it’s important to confirm this with your bank first. Payment holidays will not be given automatically; they’re designed to help those whose finances have been impacted by the coronavirus pandemic.
If it’s a particularly difficult time for you and your family and you’re concerned about debt, we’re here to help with free financial advice. Call us to speak to one of our dedicated Creditfix debt specialists on 0808 253 0798 – and start dealing with your debt.Get free advice