United Kingdom

Market overview

The UK continues to slowly move out of its COVID-19 lockdown, with the majority of businesses open, including hospitality and 'non-essential' retail. Guidance on what businesses remain closed is available here.

For more information on doing business in the United Kingdom, visit myNZTE - our free online portal for curated, in-depth information and guidance.   

Resources for the United Kingdom

Export support
Video
9:36
Last updated: 11 Jun 2020
COVID-19 Market Realities: UK Food Service, 29 May

NZTE Business Development Manager Maria Hellyer talks to Managing Director of Delaware North UK, Doug Tetley, for his insights on UK food service.

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Export support
Video
6:33
Last updated: 25 May 2020
COVID-19 Market Realities: UK Agri Sector, 18 May

UK agriculture consultant Martin Collison shares insights with NZTE BDM Alex Gowen on the UK's agricultural environment and challenges for farmers.

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Export support
Video
14:02
Last updated: 18 May 2020
COVID-19 Market Realities: UK Food & Beverage, 12 May

Grocery consultant Hamish Renton of HRA Global shares insights on the UK food retail environment with Maria Hellyer, NZTE BDM. Recorded 12 May 2020.

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Economy and trade

Official statistics indicate that the UK's GDP has contracted by more than a fifth, remaining 24.5% below its February 2020 level.

The OECD predicts that the UK's economy will contract by 11.5% in 2020, one of the deeper national recessions predicted by the organisation.

Supply chain, logistics and freight

Ports

In April, port data on shipping volumes showed a decrease in the number of visits to UK ports. However there is evidence that these volumes are beginning to recover.

There is reporting of ports in the UK facing 'intense pressure' according to the British Ports Association. There are some concerns of stockpiling in UK ports, due to goods being left uncollected, as well as concerns around the scarcity of 'reefer' refrigerated shipping containers.

Loadstar reports that social distancing measures have prevented dockers from being able to go to ports to unload cargo.

The UK Government is looking to strengthen the country's east coast ports and reduce its reliance on the port of Calais, in order to boost trade resilience. This strategy will lead to an increase in capacity at ports such as Felixstowe and could result in growth of imports from the Netherlands and Belgium.

Airports that are closed to passengers (including Gatwick and London City Airport) are still receiving airfreight.

The Government is providing financial support for critical port and infrastructure functionality, including support for certain domestic air, rail and ferry links.

Freight and logistics

Airfreight

While total flights have deceased by over half compared to the beginning of March, there has been an increase in the number of cargo flights to carry freight that would have normally been transported via passenger flights. It is estimated that overall airfreight volumes have reduced by 20-25%, and there is evidence of increased pricing.

Sea freight

Some ferry routes have been temporarily suspended or scaled back due to the fact that they usually carry a high proportion of cars, coaches and general traffic. The freight from those routes has been diverted to other UK ports, including Dover and the Channel Tunnel (which account for 85% of RORO freight).

Land freight

The Eurotunnel have been running the usual services, but there have been delays of up to two hours due to checks and hygienic and social distancing measures at Calais.

Insurance

Some insurance providers are not insuring any loss, damage or delay to some cargo going to the UK or Europe under the current circumstances, so stay in touch proactively with your insurance providers.

Supply chain

In early April, the UK Warehousing Association reported that warehousing in the UK was 'reaching capacity' due to non-essential goods stacking up. Warehouses are working to reconfigure space to increase capacity and accommodate superfluous stock.

There are emerging concerns around a backlog of imported non-essential items (such as clothing and electronics) causing logjams for freight and logistics. An emergency warehouse register has been launched to fully utilise space, including the use of a decommissioned air base for additional container storage.

Customs and regulations

At the beginning of April, the UK government announced the lifting of import duty and VAT on medical supplies, equipment, and protective garments.

The government is also streamlining documentary requirements for applications for several customs easement schemes including AEO status, inwards processing and customs warehousing. You can read more about these easements here.

The UK's Department of International Trade is allowing for electronic documents and e-signatures in export licence applications during the pandemic.

Advice to exporters

New Zealand businesses with any concerns about the situation in the UK are encouraged to contact NZTE for guidance – see our contact details here or reach out to your NZTE customer manager if applicable.

In terms of immediate activity, make the safety and wellbeing of teams your priority, and invest as needed to ensure a safe and healthy working environment. Many businesses are allowing employees to work from home where this is possible. Check in with your business partners and stakeholders to see how they are doing and how you might be able to support them during this time.

Cash flow is the primary issue for New Zealand companies in the UK currently and is critical to businesses remaining viable. Supply and demand in the market is changing rapidly. See our Advice to Exporters page for guidance on cash flow management during COVID-19.

Companies can subscribe to official UK Government Coronavirus updates here.

Consumer sentiment

A report on consumer spending in the UK (PDF) by Barclays Bank has found that consumer spending fell by 36.5% in April as social distancing measures took full effect. Other insights from the report include:

  • Despite higher spending in supermarkets, essential spending declined by 7.5% year-on-year, primarily due to a 58.9% reduction in fuel purchasing

  • Non-essential spending fell by 47.7% year-on-year, driven by a decline in hospitality and entertainment spending and non-essential travel

  • While both in-store and online spending fell year-on-year (by 53.9% and 9.8% respectively), online transactions grew by 19% as consumers continued to shop online in lockdown.

Travel

The UK continues to advise against 'all but essential' international travel to all destinations, with exemptions for a range of countries (including New Zealand) which are regarded as not posing an unacceptably high risk for British travellers. Exempt countries are listed on this official webpage.

The UK has also established COVID-19 travel corridors, covering countries and territories from which people can travel to the UK without having to self-isolate. New Zealand is currently included in these travel corridor exemptions.

The UK removed Spain from its quarantine exemption list on 25 July, meaning travellers returning to the UK from Spain are now required to self-isolate. The UK government has confirmed that talks are under way regarding an exemption for people arriving in the UK from the Balearic and Canary Islands.

Business operations

Official guidance

The UK Government has published Guidance for employers and businesses on coronavirus (COVID-19). This provides guidance on dealing with staff who may have the virus, supporting and managing staff, and limiting the spread of the virus in the workplace.

The UK Government's Business Support Helpline can also provide advice: https://www.gov.uk/business-support-helpline

Insurance

The Association of British Insurers advises businesses to check their cover and to discuss concerns with brokers. COVID-19 has been declared a notifiable disease in the UK, which could assist businesses with insurance concerns.

As insurance policies differ significantly, businesses are encouraged to check their individual terms and conditions and contact their providers. The UK Government has advised that most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will likely exclude pandemics.

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the Government and insurance industry confirmed on 17 March that advice to avoid pubs, theatres and other leisure activities is sufficient to make a claim.

Further information

The UK's Confederation of Business Industry (CBI) has produced a page of FAQs to support companies to manage the impact of COVID-19. This covers topics including:

  • communicating to employees

  • meetings, travel and events

  • employment

  • cleaning and health in the workplace

  • supply chain

  • government and financial advice

  • emergency legislation and regulation.

Government support

The below business information chiefly applies to companies that are incorporated in the United Kingdom.   

The UK Government has announced a number of measures in response to COVID-19 to ensure the impact on business is minimised. You can read further details about UK Govt support for businesses on the webpage here. Companies can use this webtool to find out what government schemes they may be eligible for.

  • Job Retention Scheme – All UK employers are able to access support to continue paying part of their employees' salary (80% up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions) for those employees that would have otherwise been let go during this time. This covers the cost of wages backdated to 1 March, and will be open until 31 October. A step-by-step guide on how to apply for the scheme can be accessed here, a video on how to make a claim is available on YouTube here, and further information on eligibility is available here. Several changes to this scheme were announced on 29 May, with workers allowed to return to work part-time from 1 July, and employers to begin sharing the cost of the scheme. From August, employers will have to pay National Insurance and pension contributions (with the government continuing to pay 80% of wages), then 10% of pay from September, rising to 20% in October. You can read more details on the changes to the retention scheme here.

  • Job Retention Bonus – This bonus was introduced in July 2020 to provide additional support to UK employers who retain furloughed staff in meaningful employment after the Job Retention Scheme ends on 31 October. Employers will receive a one-off bonus of £1,000 for every employee retained. Read more about how to claim for the bonus here.

  • Reduced VAT – In July it was announced VAT registered businesses can apply a temporary 5% reduced rate of VAT to certain supplies relating to hospitality, hotel and holiday accommodation, and admissions to certain attractions. This reduced rate will apply between 15 July 2020 and 12 January 2021. Read the official announcement here.

  • Coronavirus 'Business Interruption' Loan scheme – Loans are available for SMEs (businesses with a turnover under £45 million) up to £5 million and for up to six years. The Government will make an initial Business Interruption Payment to cover fees and provide the first 12 months interest free. This became available in the week commencing 23 March 2020 and all major banks offer the scheme. Updates are available on the Information on eligibility and how to apply is available on the British Business Bank webpage.

  • Coronavirus Large Business Interruption Loan Scheme – This scheme provides a Government guarantee of 80% to enable banks to make loans of up to £25 million to firms with a turnover between £45 and £500 million (firms with a turnover over £250 million can apply for up to £50 million of finance). The scheme launched on 21 April. More details on eligibility and how to apply are available here.

  • Coronavirus Bounce Back Loan – Launched on 28 April, this loan scheme helps SMEs affected by COVID-19 to access loans of up to £50,000. These are 100% government-guaranteed loans with no fees or interest to pay for the first 12 months. You cannot apply for this loan if you are already claiming under the Coronavirus Business Interruption Loan Scheme. More details on eligibility and how to apply are available here.

  • Larger businesses with cashflow concerns – Under the COVID-19 Corporate Financing Facility, the Bank of England will buy short-term debt from companies. This will support strong companies that have been affected by a short-term cashflow problem, allowing them to continue financing their short-term liabilities. More information is available on the Bank of England webpage.

  • Statutory Sick Pay (SSP) – For businesses with less than 250 employees, the UK Government will refund up to 14 days of statutory sick pay per employee for absence due to COVID-19. Sick leave will be made available from day one, including for those self-isolating. This rebate scheme is currently being developed and further details will be provided soon. You can read the employer's guide to SSP here.

  • COVID helpline – to help businesses and self-employed individuals 'in financial distress and with outstanding tax liabilities' to receive support from Her Majesty's Revenue and Customs (HMRC). Businesses may be able to agree on a customised Time to Pay arrangement to give them time to pay taxes if experiencing any temporary financial challenges. Dedicated helpline – 0800 0159 559.

  • One-year business rates holiday for small business in heavily hit sectors – This covers the year 2020-2021 for businesses in sectors such as hospitality, retail and entertainment. A £25,000 cash grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises with a rateable value between £15,000 and £51,000. These measures are automatic and will apply in businesses' next council tax bill.

  • Three-month extension period to file accounts – Businesses are able to apply for a three-month extension in order to prioritise managing the impact of COVID-19. Applications take around 15 minutes to complete. Full guidance on how to apply is on the UK Government website here.

Banking and financial measures

The Bank of England has announced measures to provide additional credit to smaller businesses:

  • Reduction of Bank Rate (to 0.25%) and new Term Funding Scheme with additional incentives for SMEs.

  • The Financial Policy Committee has reduced the UK's countercyclical capital buffer rate to 0% of banks' exposures to UK borrowers, with immediate effect and for at least 12 months.

  • Interest rates have been cut to 0.1%.

A number of private lenders are also making funds available to small businesses impacted by COVID-19, including £2 billion from Lloyds Banking Group and £5 billion from NatWest.

Export financing

UK Export Finance (UKEF) has expanded the scope of its Export Insurance Policy to cover transactions with a wider range of countries – including New Zealand, Australia, the EU, Canada, Iceland, Japan, Norway, Switzerland and the USA.

This measure is intended to support UK-registered exporters concerned about the impact of COVID-19 by offering insurance against the risk of non-payment when selling internationally that can cover up to 95% of the value of an export contract.


Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in the United Kingdom.

Agriculture

Farming in the UK has seen prices collapse due to the closure of foodservice channels and a shift to retail. The industry is expecting ongoing impacts on markets, farm gate returns and farm business viability.

The economic situation is also causing pressure on UK farm incomes, already following negative impacts from winter flooding and droughts in some areas. Livestock producers in particular are being negatively affected by changing market supply and demand dynamics, product preference shifts, and falling prices.

The Agriculture Horticulture Development Board (AHDB) provides weekly updates on sales of red meat, dairy and potatoes to help the industry understand how shopping behaviour is changing.

Dairy

In April, UK milk volumes were up 13% and cheese sales were also seeing largely consistent uplifts. However, some dairy products have seen a significant reduction in demand and prices have therefore dramatically decreased, with skimmed and whole milk powder prices falling sharply.

Red meat

The closure of the foodservice sector continues to significantly impact the red meat market, and the reduced income of consumers has affected what product is chosen (for instance, mince versus primal cuts).

There has been a sharp and unprecedented fall off in lamb prices, driven by the closure of French wholesale and open retail markets where lamb is traditionally sold.

Stockpiling and supply chains

The first weeks of the COVID-19 outbreak in the UK resulted in a sales increase of 30% as shoppers stockpiled according to Tescos. This cleared the supply chain of a number of products. Supply levels have since stabilised, with more normal sales volumes being reported.

Fresh produce and horticulture

A shortfall of workers for picking and harvesting has reached crisis levels in the UK fruit and vegetable sector. Workers from Eastern Europe have been flown in as a short-term response.

The UK farming industry needs as many as 90,000 workers to harvest fruit and vegetables, but with borders closed in many countries, agricultural recruiters are continuing to call for solutions including employing students and laid-off restaurant and hotel staff, as well as looking further afield for workers.

Advice for New Zealand businesses

The impact on New Zealand businesses exporting to or operating in the UK agricultural sector is broad and mixed. Each company should be encouraged to explore the market with their customers to understand the nuances relevant to them.

Like the UK's exit from the European Union, and therefore the EU Common Agricultural Policy framework, COVID-19 provides an opportunity for New Zealand businesses to support the UK's diverse primary industries. New Zealand has an existing positive reputation to build upon, and the sector remains particularly receptive to products and services that solve real-world problems.

Watch our COVID-19 Market Realities video on the UK agri sector for more insights on how New Zealand businesses can respond to the changing market and the challenges facing UK farmers.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.