{"id":72336,"date":"2020-10-27T13:12:16","date_gmt":"2020-10-27T13:12:16","guid":{"rendered":"https:\/\/secondchargemortgageuk.com\/?p=72336"},"modified":"2020-10-27T13:12:17","modified_gmt":"2020-10-27T13:12:17","slug":"uk-economy-facing-capital-destruction-event-as-furlough-ends","status":"publish","type":"post","link":"https:\/\/secondchargemortgageuk.com\/uk-economy-facing-capital-destruction-event-as-furlough-ends\/","title":{"rendered":"UK economy facing \u201ccapital destruction\u201d event as furlough ends"},"content":{"rendered":"\n

Major sectors across the UK equity market are facing a \u201ccapital destruction\u201d event in the next few months as the real impact of coronavirus feeds through to their bottom lines, Smith & Williamson Investment Management\u2019s Enterprise Fund team has warned.<\/p>\n\n\n\n

The furlough scheme has protected a number of businesses, including many in the retail and leisure industries, which have been some of the worst impacted by the coronavirus.<\/p>\n\n\n\n

However, as the scheme is wound up, many businesses will not be able to return to trade as normal. Mark Swain, co-manager of the Smith & Williamson Enterprise Fund, said the impact of this was about to be felt across several industries.<\/p>\n\n\n\n

\u201cMarkets have held up relatively well in the face of coronavirus, including in the UK, but capital destruction is coming now,\u201d he said.<\/p>\n\n\n\n

\u201cWe are at the tipping point as the furlough scheme comes to an end, and unfortunately coronavirus is going to create \u2018survivor\u2019 companies and remove a lot of weaker ones.\u201d<\/p>\n\n\n\n

Swain, who manages the Enterprise fund alongside co-manager Mark Boucher, said various sectors are seeing long-running trends \u2013 both positive and negative \u2013 being accelerated by the pandemic.<\/p>\n\n\n\n

\u201cSome companies are benefiting from this and will continue to do so and some, particularly those relying on cheap and abundant leverage, no longer have viable business models,\u201d Swain said.<\/p>\n\n\n\n

To find out more about how we can assist you with your Second Charge Mortgage please click here<\/a><\/em><\/p>\n\n\n\n

\u201cPandemics accelerate existing structural trends, and so this time companies with a strong internet presence are thriving, and those relying on high footfall, or those overburdened with too much debt for example, are really struggling.\u201d<\/p>\n\n\n\n

Swain said as a result of the nature of the crisis, the sectors in the eye of the storm, including retail and travel and leisure, were polarising, with winners likely to benefit from better business models and healthier balance sheets, but also a decline in competitors.<\/p>\n\n\n\n

\u201cIf you look at retail, for example, a lot of capacity is coming out of that market and the better operators \u2013 those that are good at retailing and have a strong internet presence \u2013 are going to prosper.\u201d<\/p>\n\n\n\n

By contrast, the duo expect the \u201czombie\u201d companies being kept afloat by the furlough scheme to face an uphill struggle for survival.<\/p>\n\n\n\n

\u201cIf you are a business that is currently not open because of Covid-19 restrictions then the future looks very bleak, and there are large swathes of struggling companies across the UK that will not get through this,\u201d he said.<\/p>\n\n\n\n

By Peter Wilson<\/em><\/p>\n\n\n\n

Source: IFA Magazine<\/a><\/p>\n\n\n\n

Discover our Mortgage Broker<\/a> services.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Major sectors across the UK equity market are facing a \u201ccapital destruction\u201d event in the next few months as the real impact of coronavirus feeds through to their bottom lines, Smith & Williamson Investment Management\u2019s Enterprise Fund team has warned. The furlough scheme has protected a number of businesses, including many in the retail and […]<\/p>\n","protected":false},"author":1,"featured_media":72255,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1978],"tags":[2111,2094,2075],"yst_prominent_words":[1362,585,653,1129,102,1547,111],"acf":[],"yoast_head":"\nUK economy facing \u201ccapital destruction\u201d event as furlough ends<\/title>\n<meta name=\"description\" content=\"Major sectors across the UK equity market are facing a \u201ccapital destruction\u201d event in the next few months as the real impact of coronavirus feeds through to their bottom lines.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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