The week’s news included; US approves $2 trillion relief package, US jobless numbers increase by record 3.2 million, Brighthouse falls into administration, EPA stops enforcing all environmental standards during outbreak
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M – Deal or no deal? How will coronavirus affect M&A?
- The Lawyer – Can you steal something that’s free?
- Law Careers – What is the future of divorce proceedings in the United Kingdom?
- City A.M – The City will guide the way for economic recovery
- CCN – Why WeWork Won’t Survive the Coronavirus Pandemic
1. UK GOVERNMENT MEASURES
The UK government introduced its most significant curbs on daily life to tackle the coronavirus outbreak. The death toll is rising and a senior health official claims keeping deaths beneath 20,000 would be a “good result”. In the past week, Boris Johnson and Health Secretary Matt Hancock have both tested positive for coronavirus and are now in self-isolation. The latest measures include:
- People may now leave home for essential purposes only. This includes travel to and from work, or for medical purposes, shopping for essential items and leaving the house for exercise once a day. The police now have powers to arrest people and issue £60 fines to those breaching these rules
- Public gatherings of more than 2 people who do not live together are banned. This includes weddings and baptisms, but funerals are permitted.
- All retailers selling non-essential goods have been closed
- Self-employed people will be entitled to receive 80% of their earnings, up to £2500 per month for three months. This will cover only those earning up to £50,000 which is 95% of the self-employed. Self-employed people must however, wait until June to receive the payment.
- Employees unable to take annual leave can carry it over for the next 2 years
2. US STIMULUS PACKAGE
US lawmakers have approved a record $2.2 trillion emergency relief package for the US economy to combat the economic fallout from the coronavirus outbreak. This comes as the US surpasses China and Italy to have the highest number of confirmed Covid-19 cases. Many US states have not yet gone so far as to impose total lockdowns, but such measures could be on the way. With cases rising rapidly, the government package was welcomed. Here’s what the emergency relief package includes:
- A $1200 cheque to all individuals earning up to $75000. This amount will scale down up to income of $99000. Those earning over $99000 will not receive any payment
- $377 billion in aid for small businesses including loans that can be forgiven if used to pay staff and/or rent
- $100 billion in funding for hospitals and healthcare
- $500 billion corporate welfare fund issuing loans and investments to business and states. Includes $25 billion for US airlines and $17 billion for national security firms
- Deferral of federal student loan payments until September 30
- Money due to Pentagon will not be allowed to fund Trump’s border wall with Mexico
- Increase of maximum unemployment benefit by $600 for four months
- Protections against foreclosures for mortgages and against evictions for renters.
3. US UNEMPLOYMENT FIGURES
Weekly claims for unemployment benefits in the US rose by their highest level in history as swathes of businesses lay off staff due to the outbreak. A staggering 3.28 million new people applied for unemployment benefits in the US. This far exceeds the previous one week rise record of roughly 700,000 in 1982. The volume of applications crashed the applications systems and local authorities fear they may not have the funds to cater for all applicants. Whether the $370 billion in government aid to small businesses and expanded employment benefits will be enough to avoid a unemployment crisis remains to be seen.
4. UK CREDIT RATING SLASHED
The UK’s credit rating has been cut from AA to AA- by rating agency Fitch. The decision to cut the rating was due to the heavily increased government debt levels fuelled by the coronavirus. A £60 billion stimulus package was announced to keep businesses and households running during the coronavirus lockdown. This huge spending package along with the inevitable economic shock caused by Covid-19 were key factors in the decision to cut the UKs rating. Other European countries such as Belgium and the Czech Republic saw their ratings cut. Economists are expecting a severe global recession to ensue and the UK economy to shrink by as much as 4% in 2020, if the outbreak can be contained.
5. BRIGHT HOUSE COLLAPSE
Rent-to-own firm Bright House is to fall into administration. The firm had been struggling for some time after stricter lending rules forced huge payouts and slashed income. Last year, the FCA imposed a 100% interest cap on rent-to-own products. Prior to this, some customers had ended up paying over 400% in interest charges. Bright House was also flooded with mis-selling claims after it failed to assess whether customers could afford repayments. It was forced to compensate customers. The number of claims along with the reduced income sealed its demise. Bright House is the UK’s largest rent-to-own firm with l 240 shops and 2400 employees.
6. EPA DROPS ENVIRONMENTAL STANDARDS
The US Environmental Protection Agency has temporarily suspended the enforcement of all environmental protection laws during the coronavirus outbreak. In practice, this means companies will not be required to adhere to environmental standards for an indefinite time. As long as companies can show failures were caused by the pandemic, no failure, even air or water pollution will face any reprimand. The environmental impact of this may not be so severe given states across America’s are either facing total lockdowns or restrictions. The EPA recognised that many companies would struggle to meet the environmental legislation while protecting workers and the public from the outbreak.
7. EAT COLLAPSES
Sandwich chain Eat is to close all of its stores permanently. Eat had been struggling for some time, posting a huge £17.3 million in 2017-2018. Eat was subsequently bought by Pret A Manger last year for an estimates £60 million, hoping to turn the fortunes of the company. This evidently failed and Pret a Manger announced that this is the end of the road for the food chain. Eat will close all of its 90 stores. Most of Eat’s stores are based in London and it was founded in 1996.
8. LAURA ASHLEY STORE CLOSURES
Laura Ashley is to shut 70 of its 147 UK stores after it fell into administration. The retailer will now seek a buyer. These closures will however put 721 jobs in jeopardy. The retailer posted a £4 million loss in the first half of the year but had seen slightly improved trading up until the outbreak but all gains were lost. Last month, Laura Ashley had obtained a £20 million working capital facility in a bid to stay afloat but the company simply ran out of time. The coronavirus outbreak has put greater pressure on high street retailers as footfall declined heavily over the past month. Laura Ashley was already struggling and the outbreak Prior to the lockdown, many other high street retailers across the country had already planned temporary closures. Whether the government measures to support businesses will prevent more collapses remains to be seen.
9. CARLUCCIO’S ON THE BRINK
Restaurant Carluccio’s is on the brink of collapse due to the coronavirus outbreak. The Italian chain is set to file for administration but was struggling for months prior to this amid a wider downturn in the casual dining sector. The downturn had already taken competitors such as Jamie’s Italian and Prezzo as victims. It is unclear whether the government pledge to cover 80% of workers’ salaries will be enough to keep the business going. Administrators are currently working with the restaurant to decide options. The restaurant already shut 30 restaurants in 2018 as part of Company Voluntary Arrangement. A total collapse of the restaurant could see the loss of 2000 jobs.
10. BROADBAND COMPANIES REMOVE DATA CAPS
UK internet providers have removed data caps on all fixed broadband services. The measure is designed to help people stay connected during the lockdown. The deal was struck between the government and major providers including BT/EE, Openreach, Virgin Media, Sky, TalkTalk, O2, Vodafone, Three, Hyperoptic, Gigaclear, and KCOM. New mobile and broadband packages will be available to customers which will be more generous. Engineers will also be at work to improve network reliability and speed. The companies will also treat fairly any person unable to pay their bills due to the pandemic.