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UK government funding during COVID-19
The coronavirus pandemic has been the biggest crisis that most of us living now in the 21st century have experienced. Turning our lives upside down and adapting to a new normal that involves wearing a face mask and (trying) to keep a healthy social distance from others with those outside your ‘bubble’. Not only has this had an impact on our mental health, wellbeing and for some, a detrimental threat to our health it has also resulted in a global financial crisis.

According to The Guardian, The International Monetary Fund has warned that the world faces the worst recession since the Great Depression. [1] There is pressure on the government from each country to provide income or grants to individuals and businesses to simply survive the pandemic and keep food on the table and bills paid. One of those schemes being Furlough. The government agreed to pay an 80% contribution to wages of workers up to £2,500 each per month, the UK government had received applications for furlough payments from more than 387,000 firms to provide interim incomes for more than 2.8 million people, an intervention that has cost at least £2bn so far. (24/4/20) [1]

The UK government has promised to back more than £300bn of loans to businesses, with larger firms able to access finance from the Bank of England and smaller firms able to borrow using Treasury-guaranteed loans from high street banks. [1] This has resulted in a huge reduction in interest rates in order to help support these schemes. A small price to pay for many.
Every cloud…
Now although it has been a series of unfortunate events, we must look on the bright side! Despite the hit to the treasury and private sector wallet it has encouraged businesses to work in new and creative ways, to adapt to a digital world and act fast, become stronger and more resilient. Also the realisation for many companies that they need to trust their employees to efficiently work from home, which in turn has created a healthy work/life balance.
From a practical standpoint, the UK has managed to grant schemes and provide financial support to its population in one way or another, whether that be receiving furlough payments or just a reduction in VAT on your favourite restaurant’s food bill. Which makes us feel pretty good during this time of doom and gloom and to feel secure knowing the UK government is supporting its population in these unprecedented times.
The Bank of England have released a statement: “Whatever the future brings we will do all we can to support UK businesses and households at this difficult time” they intend to do this by implementing the following:
  • Lower interest rates that mean cheaper loans for businesses and households
  • Offering banks and building societies long-term funding with interest rates at, or close to, 0.1%. This will reduce the interest rate they pass on to customers.
  • Working closely with HM Government to support large businesses by offering them cash for their corporate debt. This will help them to keep paying wages and their suppliers, even if they have serious cash flow problems.
  • Freezing dividend payments to shareholders and cutting cash bonuses to senior staff [2]
What this means for JPD Capital?
Our investment in the cannabis industry has only been marginally impacted by the crisis due to the demand for cannabis rising during COVID-19. So although other markets may have experienced a big drop in revenue and value, our projects and the industry as a whole have managed to not only just stay afloat but thrive!

If you are looking for a market sector that is showing positive high growth projections even during turbulent times, then please visit:
www.jpdcapital.com/investors

Bibliography:

1. https://www.theguardian.com/world/2020/apr/24/what-will-coronavirus-mean-for-the-british-economy
2. https://www.bankofengland.co.uk/coronavirus

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