Economics

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Retail and the pandemic - should debts of smaller shopkeepers be written off?

Geoff Riley

19th July 2021

The UK's small shopkeepers collectively are struggling under a £1.7 billion mountain of debt according to a new report.

Many resorted to taking out emergency government-backed loans during the first wave of the pandemic and they are now vulnerable to uncertain revenue streams as lockdown restrictions are eased along with the threat of rising interest costs and debts coming up for repayment.

The Grimsey Report reviewed the published accounts of every UK independent business across the retail, services and hospitality sectors with total assets of £250,000 or less.

Report on the high street commissioned by former Iceland boss Bill Grimsey finds debt amongst 144,000 independent high street SMEs (small and medium sized enterprises) has risen from £490m to almost £2.4bn since start of pandemic.

This debt could lead to a significant number of business failures.

Is there a case for some form of debt forgiveness for smaller retailers? Grimsey calls on the British government to write off loans, potentially using about £2bn in funds returned to state coffers by large retailers

Opponents would argue that forgiving debt risks creating moral hazard and that debt write-offs would place yet another burden on tax payers.

You can download the latest Grimsey report on the High Street using this link. https://assets.publishing.serv... ;

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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