The coronavirus (Covid-19) epidemic has hit the world’s economy hard. The UK, which has a strong economy, is also facing a major economic challenge at the moment. Along with Finance Minister Rishi Sunak, the local level (boroughs) are also announcing various programs to overcome this challenge. Will the relief packages being announced during this epidemic work? What is the status of digital startups in the UK after Corona?  KRISHNA PRASAD DAHAL, FCCA, Managing Partner of Focus Somar Audit & Tax Accountants Ltd (www.focusandsomaraccountants.com), is also contesting for the post of Council Member of the ACCA- a representative body of professional accountants from around the world. He spoke to SOUTH ASIA TIME on related issues. Excerpts:

The second wave of coronavirus outbreaks has had a negative impact on the UK economy due to lockouts and stricter sanctions. How is the UK government prepared for this?

The epidemic has had a profound effect on people’s daily lives, work, businesses and public institutions. Measuring the UK government’s response and the financial and economic impact of the epidemic, it will have an impact on public spending and public service delivery for many years to come.

This means that the government has to borrow a large amount of money. In the first year of the epidemic, from April 2020 to 2021, 299 million was borrowed, the highest since 1946.

UK is currently working on a new plan for economic growth, job creation and the development of British industry. Some plans have been put forward to restore the economy. For example, tourism recovery plan, distribution of new rail passes, investment of one billion pounds for the network of electric vehicle charging hubs, and removal of carbon in transportation.

Similarly, councils have begun planning their local recoveries. Such schemes are believed to contribute to the development of the economy in the region. A long-term plan is being prepared to rebuild consumer confidence and enable retail, hospitality, cultural and tourism sectors to return to business.

What is the current state of the economy in all four countries of the United Kingdom- England, Wales, Scotland and Northern Ireland?

Prior to the Covid-19 epidemic, Scotland had a deficit of more than 7% of GDP. Similarly, the deficits in Wales and Northern Ireland were even higher 18 % and 19 %, respectively.

Scotland, Wales or Ireland can adopt their own policies to increase income and tax range for economic growth. However, this objective is difficult to achieve in the short term. Scotland’s GDP per capita and tax revenue is similar to Inland’s. It has spent more than £1,700 per person on public services.

Wales will face a different and bigger challenge. Wales has a lower per capita income than Scotland. For strengthening the economy of Wales, various measures will have to be taken by the government. It is seen that the tax range should be increased.

According to the IMF’s April 2021 projection, economic growth expected in 2021 (5.3%) and 2022 (5.1%). This is mainly due to the last minute trade agreement signed between the UK and the EU. Following Brexit, the EU-UK Trade and Cooperation Agreement was signed, defining new terms for future relations and cooperation between the UK and the rest of the EU. Government consumption is projected to make a positive contribution in the next two years. During an epidemic, there is uncertainty about development. According to the forecast of the EU Commission, by the end of 2022 UK’s GDP is projected to still be 5% below the level of the fourth quarter of 2019. One in four employees lost their jobs during the epidemic. Vehicles have declined by 6 percentage points. Real estate prices are rising in rural and coastal areas during the epidemic. Credit lending has risen for the second time since August 2020. Retail sales have been declining since the lockdown caused by Covid 19.

What kinds of businesses were hit hardest in the UK during the Corona epidemic? And what kind of businesses are benefiting now?

Coronavirus is the most difficult challenge for many businesses in the UK. Consumers had to be confined to their homes due to the lockdown caused by Corona. Shops, pubs, restaurants etc. are closed. This situation became unfavorable for many businesses.

The epidemic has particularly affected following industries:

– Transportation (airlines, cruise lines, travel agents), Hospitality area (restaurant, bar, hotel), Health and beauty (salon, parlor, gym, recreation center), Assembly manufacturing (automotive, meat packing etc.). For most businesses, the aftermath has been a frustrating one. However, for some companies, it has been beneficial. Different sectors and businesses have been successful despite unprecedented challenges such as Personal safety equipment, Food and beverage delivery, Means of home entertainment, Home and garden items and Health and fitness items.

The UK has been announcing various relief packages since March last year to boost the economy. Are those packages really effective?

The UK government has come up with a number of schemes to help the economy, business and workers in the aftermath of the Covid 19 epidemic.

Economic activity shrank as the British government announced measures to reduce/stop the spread of corona. The government is bringing various relief packages to keep the economic activity going. I have found these packages to be effective. Many have the impression that Finance Minister Rishi Sunak has been working very carefully and wisely on how to make the shrinking economy effective. For this, relief packages are being announced at different stages as per the need. The government has also come up with a scheme to provide 80 percent salary to those who have lost their jobs. Similarly, there are also plans for self-employment. The package has also been announced in a progressive way for those who have quit their jobs. A grant of £10,000 to £25,000 has been given for house rent and office expenses. The deadline for payment of value-added tax (VAT) and other taxes has been extended. The loan repayment period has been extended. Loan facility has been provided to the businessmen affected by coronavirus. Similarly, train and other public transport fares have also been reduced. In that sense, the package brought by the UK on this epidemic is really effective.

What has been the state of digital start-ups in the UK lately?

It is true that some tech enterprises are in good shape even during an epidemic. We know how social distance has been maintained during the epidemic, consumer behavior and working methods have changed. As a result, online businesses, video conferencing and e-commerce have grown. Technology is also being used in the education sector.

According to Tech Nation report 2021, UK tech pioneers are creating the future. They are developing groundbreaking technologies, creating new jobs, and supporting societies to thrive digital start-up in the UK that are mainly developing  IT infrastructure, E-commerce, digitalization in all aspects of the data handling and processing, digital meetings, digital signature and documentation, digital record keeping and cyber security.

El Salvador, a Central American country, has introduced the cryptocurrency, Bitcoin, across the country including a rule to allow anyone to pay via Bitcoin without any refusal; it has been a subject of controversy as well. Does Bitcoin affect the country’s economy? What is the situation in the UK?

The financial regulator, the Financial Conduct Authority (FCA), has banned the sale and distribution of Bitcoin and other cryptocurrency derivatives to investors in the UK. This is another blow to the growing cryptocurrency market. In recent days, US authorities have accused Bitmax, a major crypto derivatives exchange, of failing to register in the United States and allegedly failing to comply with anti-money laundering laws.

According to a recent report published by the University of Cambridge, most of the firms involved in crypto investment are still operating without a license. And other operators too are potentially involved in such illegal activities. Bitcoin, designed to transform the existing financial system and eliminate financial intermediaries, has a strong potential to impact the global economy. In some ways, it is an alternative method to the global financial system. This type of cryptocurrency has established some degree of credibility in the market including banking sectors, investors, governments, and companies.

You have been providing professional services in the field of accounting and auditing in the UK for the past 15 years and are currently a candidate for a representative body of professional accountants from around the world. What are the reasons for running for ACCA Council Member and what are your agenda?

As a council member of a prestigious organization affiliated with Professional Chartered Certified Accountants from around the world, I would like to express my commitment to make the organization more effective, inclusive and globally recognized. I am very proud to be a member of this global organization with great potential for further development and expansion. I would like to call on all members of Professional Chartered Certified Accountants to give me the opportunity to contribute to the organization by electing me as a Council Member.

I would like to invest my experience and capabilities to spread the best business education around the world by refining the organization’s global identity, business value, recognition, global expertise, technical skills and charity spirit. Along with this, I have moved forward with the agenda of ‘recognizing’ ACCA in every region and country of the world, adjusting the fees for ACCA education and membership according to their place and economic capacity and providing necessary assistance from the organization to encourage talented students from developing countries.