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The Domino Effect of Covid-19 – Challenges Facing Businesses in Wales

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Written by:

Lloyd Powell
Head of ACCA Wales

 

 


The economic and social impact of the pandemic has expanded, challenges are growing for businesses.

So how do we stop the domino effect of Covid-19? How to balance economic needs against public health?

This is precisely the dilemma the Welsh Government is facing when deciding how to reopen the economy and support businesses, whilst not placing public health in jeopardy through second waves and possible local lockdowns – with all the possible impact on health and the economy.

Throughout this pandemic, many businesses, large and small, have praised the UK and Welsh government support packages, including grants, loans and other interventions. Recent ACCA research suggests that 53% think the measures so far have been effective. It is imperative the governments listen to the remaining 47%, and does not take its eye off the ball. It must be receptive to business and its legitimate concerns at a hugely worrying period of time – concerns around future funding, but also the timescales for reopening and guidance for re-opening

ACCA’s Covid-19 global survey ‘The Road to Recovery reveals just how the economic and health dynamic is weighing on the nation’s mind. The overall picture is one of a slow return to normal, according to senior accountancy practitioners representing business across multiple sectors across the country.

Governments around the world have been focusing on firefighting the virus, containing it, developing support mechanisms for business. The rate in which the infection spread meant that much  of the work was reactionary. The proof is in financial reforecasting, a staggering 85% of business leaders we polled have now conducted a reforecast, and of those 15% believe negative growth of 50% or more is likely compared with the prior financial year.

A cautious approach and fiscal prudence being shown by accountants will undoubtedly help business navigate the uncertain recovery stage and plan for the future. The 2008 global financial crisis presented a significant challenge, and businesses were compelled to reset and reconfigure their operations. ACCA’s survey highlights how businesses are now exploring future working arrangements and achieving financial sustainability in the post-Covid economy.

With the Covid-19 rate of infection falling, many businesses will be planning in the same vein, moving from earlier reactivity to proactivity. As Wales unlocks at a different pace to other parts of the UK, the clamour from some sectors to speed up the re-opening process is growing, in order to support key sectors in Wales such as hospitality, leisure and tourism.

Accountants have played a crucial role in the first phase of the pandemic – supporting businesses and organisations to keep trading, applying for available loans and grants and reforecasting in highly volatile times. They will now undoubtedly play a crucial role in the recovery phase.

Through our “roadmap to recovery”, we’re recommending that organisations follow the “three As” – Act and respond sustainably to the immediate crisis in the short term; Analyse the different information sources to start to build the path to recovery in the medium term and Anticipate how strategies need to evolve over the longer term.