What could be the impact of the furlough scheme ending?

By Mr Bankruptcy

25th August 2020

When the Chancellor announced the Job Retention Scheme, commonly known as furlough, millions of employees and businesses breathed a sigh of relief as it provided some short-term security whilst the UK and the world adjusted to managing the global Covid-19 pandemic. Now that the furlough scheme is due to end, what impact is it likely to have?

Why was furlough introduced?

The Government introduced the furlough scheme to pay the majority of wages for employees who were prevented from working due to Covid-19, to prevent businesses from having to make mass redundancies. An estimated 10 million workers had up to 80% of their wages paid by the government up to a £2500 monthly limit. The cost to the country so far is a staggering £34.7 billion and it is estimated that the total cost will be £80 billion.

This offered a lifeline for many people and businesses, but is due to finish at the end of October.

Predictions for the end of the furlough scheme

In order to avoid a mass of redundancies when the furlough scheme ends, business recovery needs to justify pre-lockdown levels of employment, but this may not be the case for many employers. In research, 51% of business leaders say they will have to make redundancies within three months of furlough ending, and unemployment is likely to rise to around 10% this year as business make redundancies at the end of the furlough scheme.

Should furlough continue?

The National Institute of Economic and Social Research argues for extending furlough to summer 2021 will protect millions of jobs, but it also argues that continuing furlough is only delaying the inevitable.

Continuing schemes to support for businesses may be hiding so-called “zombie firms” and “zombie jobs”, that are no longer viable and are only being propped by the support offered by banks and Government during lockdown. If this is the case when these additional schemes end, we should prepare to also see a rise in business insolvency.

As millions or workers and businesses see the Government’s financial support withdrawn there is real concern that there will be a substantial debt crisis as the economy continues to get back to its feet. Even as we see lockdown easing, I get the sense that we’re not out of the woods yet and there are still many difficulties ahead.

James Rosa Associates

James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors facing unmanageable debt or involved in civil or commercial disputes.

Our services include:

Insolvency support
Negotiated settlements
Personal assisted bankruptcy
Mediation

We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

Find out if you qualify for a free consultation

If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

Spotting the signs that someone close to you is heading into unmanageable debt

By Mr Bankruptcy

17th August 2020

Worry about unmanageable debt could right now be dominating every waking moment of someone you know or love. A recent report by the Money and Mental Health Policy Institute referred to debt as a “Silent Killer” because it can so often be the driver to a suicide attempt. Unfortunately, it’s still an under-reported issue.

A Samaritans statistical report for 2018 showed that even before the current Covid19 crisis, over 6500 people in the UK committed suicide, with men aged 45-49 in the highest risk category.

With more recent studies indicating a severe impact from Covid19 on mental health, then we’re all increasingly likely to know someone who’s mental health is suffering because of debt, maybe because they’ve lost their job or their business is struggling. It also highlights an urgent need to improve society’s understanding of debt and its effect on people’s lives and to talk about it.

A personal journey

I’ve learned from my own experience that it’s very easy to get into serious debt, and to put up an outward show of success. This, coupled with the fact that both debt and mental health aren’t easy to talk about, even to a partner (in the personal and business sense of the word), make it difficult to spot someone who needs help until it’s too late.

The first step to tackling debt and mental health problems is to talk, but it often requires someone close to initiate the conversation. So here are a few tell-tale signs you might look out for if you married to, or working with, someone who’s hiding a debt problem which is damaging their mental health.

Giveaway signs of a debt problem

“Does anyone know a good lender?” This sort of question could imply they’ve tried other options but are now considering a last resort lender. This can seem a way out but it’s often a quick fix that can make things worse. It could indicate they’re running out of options.

“My bank is rubbish.” Overdraft charges, lack of personal contact – we all grumble about our bank, but if it’s refused to extend an overdraft or agree to a loan then maybe the local branch has a clearer picture of your partner’s finances than you do.

Stress and personality changes. From my personal dealings with debt I remember the huge level of stress I suffered. There are personality changes and signs you can look out for, such as irritability, anger, loss of sense of humour, an inability to relax, substance abuse. The Mental health charity Mind lists a number of signs of stress.

A change in public attitudes? Help is available

The first step to dealing with the stress of debt is to talk about it and spotting the signs helps you start that process. The Royal College of Psychiatrists recommends starting a conversation, listening without judging and avoiding getting stressed or upset yourself.

The college also advises that you check in with them on a regular basis to talk, listen and be ready to offer help and support if they ask. Fortunately, there are a number of organisations and website ready to provide advice, including the NHS, Mind, Samaritans, and 4MentalHealth. And since 2017, all local authorities are required to have a suicide prevention strategy in place, outlining the steps to reduce suicides in their area.

Debt impacts a person’s professional and personal life and the lives of those around them. Fortunately, along with mental health, it’s no longer a taboo subject and it’s much easier to find, or to offer, the support needed to get through it.