Financial impact on businesses during Covid-19
The coronavirus pandemic has been an unprecedented time that has affected lives across the globe. Not only has it been a worldwide health crisis, but it has also damaged global finances, brought industries to a standstill, and dismantled our everyday routines. In this post, we will be detailing the financial impact that coronavirus has had on businesses so far and when we can expect to see improvements.
Business closures, reduced productivity & trade disruption
By the time the World Health Organization announced covid-19 as a pandemic, there had already been significant damage to businesses. This included full business closures, reduced productivity, and trade disruption across the globe in a range of industries, such as tourism, manufacturing, and retail. During the first few months of the virus spreading across the globe, there was a huge collapse in demand for oil and oil-based products, a circuit breaker that was triggered for the first time since 2007, and the largest global recession in history was started.
Global lockdowns, furlough schemes & working from home
Lockdown was something that most of the world had not experienced before, but it was a necessary step that was taken in a range of countries. Along with the lockdowns came the idea of working from home. Many businesses relied on their employees physically coming to work, but many realized that they could guarantee the same, if not more productivity by allowing employees to work from home. This has also caused businesses to discuss the possibility of allowing employees to continue working from home after the pandemic, with many going completely remote.
However, for some businesses, the disruption to profits was too much to keep all staff members in work. Many opted to use the furlough scheme as introduced in the UK as a way to use government funds to pay 80% of each employee’s wages. For some, the only option was to make staff redundant, leading to a rise in loan applications, like payday loans to help households make ends meet.
The shift to ecommerce and small businesses
As many businesses closed their physical stores and consumers spent more time at home, there has been a significant shift to ecommerce. Many businesses took to online platforms to sell over the web for the first time and consumers spent online more than ever before. With less need to pay for their commute, people found that they had more disposable income to spend online.
Along with the lockdowns, many people also found that they had more time to pursue their interests and set up a home-based business. From baked goods to handmade chocolates, and freelance web develops to copywriters, many people started their own small business, either to earn money alongside their full time role or with the intention of taking it full time.
Unprecedented levels of unemployment
With the introduction of the furlough scheme in the UK, many employees saw their salaries cut, while some people were made redundant and looking for a new job. However, this has proven a difficult task with the number of job opportunities remaining very low in some countries, such as Spain and France. It could take years for the levels to return to those seen pre-pandemic, but some countries have seen a steady increase in job vacancies, like Australia.
It is predicted that it may take some businesses a few years to completely recover from the financial impact of coronavirus, but with the vaccination programme and consistent research, things are starting to look positive.