UK Businesses Cut Investment, Plan Redundancies
According to the Office of National Statistics, around half of businesses in the United Kingdom have cut back on investment spending or completely stopped capital expenditure since the government imposed a countrywide shutdown. The main reason cited for this is to preserve money, with 44% of companies on the survey claiming they had less than 6 months of cash reserves left before going bust.
Low Business Confidence
The ONS had 5,100 responses to its survey. Of those businesses who submitted responses to the ONS, 23.2% said their levels of investment were below normal and 19.8% said that capital expenditure had stopped completely. This gives a total of 43% of companies with below expected investment. Although recent economic indicators show that Britain may be slowly returning to a sense of normality, with people retuning to work and job advertisement rising, this new information on investment intentions gives further evidence of the damaging effect government actions have had on the UK economy.
Jobs Face the Axe
In terms of jobs outlook, the polling company YouGov found that over half of businesses are planning on making cuts to staff levels after the winding down of the taxpayer-funded furlough scheme. 500 firms answered the YouGov poll, which revealed only 34% of companies felt confident that all their staff would be retained after the furlough scheme comes to an end in October. Economists estimate that the scheme has prevented a huge spike in unemployment, with the official jobless figure for April being just 3.9% - without it, the figure could have been as high as 24%.
Gold Over the Last Week
Over the last week, gold has creeped up in value against the pound sterling. It’s currently trading at £1439.06 per troy ounce which is a rise of 2.02% over the last seven days, and only £18.88 off its all-time record high price in sterling. Although the news of loosening shutdown restrictions will come as a welcome relief to many, low business confidence should give a pause to caution as to the economic dangers that lie ahead.
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