How big businesses can get the economy back on track after Covid-19

13 March 2020

Paul Barnes is a partner at DRD Partnership, chief executive of the Association of International Retail (AIR) and a member of the Government’s Tourism Industry Emergency Response (TIER) Task Force.

With a pandemic now declared by WHO, the UK Government yesterday formally moved into the ‘delay’ phase of its response plan, announcing that it would introduce emergency legislation next week “to include measures to help in the national effort to keep vital public services running, to support businesses, and to help everyone to play their part.” It’s clear the economic impact of Covid-19 is about to get even worse.

The Government’s Tourism Industry Emergency Response (TIER) Task Force, which I sit on, has been monitoring closely the impact that Covid-19 is having on tourism.  When we meet next week, we will learn more about the measures the Government plans to take, and react accordingly to help the sector.

Distancing people to stop the spread of the now uncontained virus will bring a whole new level of disruption.  What started with school closures and the cancellation of events and meetings has led to total lockdown in Italy.  The immediate impact on business finances will clearly be enormous.

Earlier this week the Government’s Budget laid out its economic rescue plan in an attempt to halt the advance of Covid-19 and limit its impact on the human and economic well-being of the United Kingdom, backed by the Bank of England’s rate cut. Unlimited funds to the National Health service.  Hundreds of millions of pounds for individuals and small businesses to protect them from the economic slowdown.

But while it’s helpful that the Government pumps billions of pounds into the economy to support small businesses through these unprecedented times, those large businesses that form the backbone of Britain’s economy are left wondering how it helps them.

The Government’s attitude seems to be that if your business is too big and too expensive to support financially during and after this health emergency, then you’re on your own.

That’s why businesses need to look now at what Government can do to support them during the recovery period when it eventually comes, that won’t cost the Government money, primarily by removing unnecessary regulations. There will never be a better time to push for these policy changes.

Take international retail, for example. It’s currently worth around £6 billion in sales every year making it Britain’s 12th largest export sector.  And by generating billions of pounds of additional sales from overseas visitors, it relieves the pressure on high street stores throughout the UK.

International retail was one of the first sectors to feel the impact of Covid-19, particularly since the biggest international spenders are from China, who make up 25% of such spend. But the sector is comprised of large businesses that will get very little financial help from the Government to counter the impact of the Coronavirus.

So last week, DRD Partnership launched the Association of International Retail (AIR) (www.internationalretail.co.uk) to represent all those companies that have an interest in the growth of retail sales from international visitors to the UK. Our ‘Post-Covid-19 UK International Retail Recovery Plan’ doesn’t ask the Government for a single penny.

Instead it proposes cost-free changes to various regulations that will encourage more Chinese people to visit the UK once the virus is contained: a streamlined visa application process; more coordination between the Government’s tourism marketing agencies and the big brands; better welcome at our international airports; and better services at shops and hotels.

Similarly, exempting the UK’s major international centres, not just in London but across the UK,

from the restraints of the Sunday Trading Act would generate significant additional sales for retailers in the capital and the regions, estimated at £260 million in the West End alone.

And hidden in the Budget was a consultation for one of AIR’s key asks. Extending tax-free shopping to visitors from EU member states after the transition period could add over £1.4 billion in additional sales to the UK’s retail sector each year at no cost to the Government.

These are not just short-term rescue plans. They are long-term recovery plans which will help the sector to grow year after year, and equally importantly will boost what the Government now recognises as sluggish growth in the months and years ahead.

This is just one example of how larger businesses in one sector need to look to Government to help their post Covid-19 recovery, not with cash but with cost-free policy support that will allow them, and the wider economy, to grow.  As Britain moves into the most intense stage of the Covid-19 outbreak, now is the time to identify and promote those changes. Your sector should be next.

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