Battered by Brexit, British companies now grapple with something worse
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The past year has been a particularly anxious time for many British businesses. The uncertainties of Brexit have been a major worry, and for companies that export to the U.S., the threat of American tariffs has been another source of concern. But all that pales into insignificance alongside the coronavirus pandemic.
Marketplace revisited a couple of small businesses, featured earlier on the show, to find out how they’ve been coping with the latest crisis.
As a cheese monger based at London’s Borough Market, Dominic Coyte is classed as a key worker and so is free to ply his wares. But his staff of 15 just didn’t feel safe mingling with the public.
“I wanted us to carry on as much as we could,” Coyte said. “but the decision was taken to furlough all the staff. And that’s what the staff wanted. One hundred percent said: ‘We want to be furloughed.’ ”
Staff members have been temporarily laid off with the government paying 80% of their wages. Meanwhile, Coyte struggles on, manning a small stall in a Saturday market, selling some cheese online and generating a trickle of revenue, equal to only 10% of his usual retail income.
Brexit was bad enough for his cheese company, which imports much of its product from continental Europe. The 2016 vote to leave the European Union triggered a sharp fall in the British pound, making imports much more expensive and eating into his profit.
“It seems like we’ve had crisis after crisis in the last four or five years with Brexit and now the coronavirus,” Coyte said ruefully. “It seems like a lot of effort just to survive. “
Bolstered by a large, government-backed bank loan, he reckons his company can survive so long as business is back to normal by the fall.
More than 100 miles north of London, Clevedon Fasteners, a small engineering company, is also struggling. Before the virus struck, the company was making more than 30 million rivets a month, exporting to 38 countries and employing 40 workers. Today the factory is shuttered.
“We thought we could ride out the storm,” said Clevedon Managing Director Steve Hardeman. “But our subcontractors — the heat treaters, platers and toolmakers who finish our products — shut down, and we really couldn’t carry on.”
His 15 office staff are now working on full pay from home, dealing with administrative duties and processing the small number of orders they’re still getting. He’s furloughed his 25 factory workers and is topping up their 80% wage-support payment from the government.
“It’d be very unfair if people in manufacturing who can’t work from home only got 80% of their income when all the office staff are getting 100%,” Hardeman explained.
But this can’t go on for long. Hardeman says that if the lockdown stretches beyond the summer, his company will be finished, and it won’t be the only one. U.K. Inc. — or U.K. PLC, as the Brits put it — is already in deep trouble.
“If this isn’t sorted and people aren’t back to work within three months, it won’t only be Clevedon. It will be U.K. PLC that goes bust,” Hardeman warned.
The damage is already unprecedented in modern times. According to one survey, some 20% of British companies have furloughed their entire staff or intend to do so. A further 17% are planning to furlough at least three-quarters of their workers. Nine million Brits — more than a quarter of the workforce — could be out of work.
The Cabinet will review the lockdown Thursday.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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