Friday April 03 , 2020
The effect of the Coronavirus on the economy is on a scale that is unimaginable.
Share values have plummeted across the globe with virtually every international market dropping off a cliff. There has been panic selling of assets and central banks and Governments are struggling for solutions.
In response, the Bank of England has dropped interest rates from 0.75 to 0.25% and now 0.1%. Borrowing costs theoretically should be lower than they have ever been.
The new Chancellor of the Exchequer Rishi Sunak has become the nation’s favourite finance boss overnight. He has announced a huge package to support workers and businesses who could lose jobs and salaries very quickly:
- No business rates for 12 months in England (3 months in Northern Ireland)
- Cash grants of £10,000 for those with a rateable value below £15,000.
- Cash grants of up to £25,000 to be available to smaller businesses in the retail, hospitality and leisure sectors with a rateable value £15,000 and £51,000.
- The new business interruption loan scheme announced at the Budget is being extended to small and medium-sized businesses, providing loans of up to £5 million with no interest due for the first 12 months, up from £1.2 million.
- Three month mortgage holidays and loan repayment holidays.
- The rental market will also be supported and rental holidays can be provided without being evicted.
- The government will also cover 80% of staff salaries up to £2,500 per month (check with your employer).
The support package is worth £330billion about 15%GDP.
But what can you do if you are personally affected?
Tell your mortgage provider about your situation. The Government has agreed with mortgage providers a three month mortgage break to homeowners in financial difficulties and/or seek an extension to your repayment period thereby reducing your monthly payment. But check the terms of this arrangement.
Check loan repayments and contact your lender and make sure that there are no penalties if you extend the period of the loan repayment or take a payment holiday.
Some banks are suggesting that they will waive penalties for missed credit card payments. Please don’t just miss the payment, talk to your credit card provider and ask them what they can offer. If they are going to penalise you, consider switching to a 0% or lower rate of interest.
Some banks are waiving fees for cash advances on credit cards, but make sure you check you can do this. Normally cash advances using a credit card attract large interest rates or fees.
A number of banks are waiving fees or notice periods to access fixed term savings and allowing transfer of savings into current accounts. Check with your savings providers so you don’t incur any penalties.
The government has announced a sick pay package of around £94.25 per week. Seek this from your employer and if being made redundant, request your redundancy entitlements.
Review your weekly, monthly and annual expenditure. Do you really need your paid tv services? Maybe you do if we are in lockdown!
Now is the time to look at broadband providers, energy providers and get the best deals for you and your families. Online switching tools such as Uswitch can be a good source of looking for the best deals. In Northern Ireland check out the Consumer Council’s price comparison tools.
If you have booked to attend an event and it has been cancelled with no prospect of it being rescheduled, request your money back.
If your flight, travel arrangements or holiday has been cancelled, request your money back.
Now is the time to check and review your financial circumstances.
During the previous financial crisis Consumers bailed out the banks, perhaps now is the time for the banks to help out consumers if they incur financial difficulties.
Lastly, look out for each other young and old. If you know of people who are self-isolating, offer to get what they need and leave it at their door. If this whole thing is scaring you, look after your mental health. If you are struggling talk to friends and family, lift the phone to someone and above all, Stay Safe and Stay at Home.
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