Economy restart "still in first gear" according to British Chambers of Commerce
Results from the latest BCC Coronavirus Impact Tracker in partnership with job site Indeed reveal that businesses are operating at half of their pre-Covid 19 capacity on average, despite lockdown measures easing.
More than half cited reduced demand and possible future lockdowns as major obstacles to restarting day-to-day operations.
On average, businesses are operating at half of their pre-Covid 19 capacity
Customer demand (54%) and possible future local lockdowns (52%) are the two top obstacles to maintaining day-to-day operations
BCC and Indeed call for swift Government action to reduce the cost of employment to protect businesses and preserve jobs
The leading business organisation’s tracker survey, which serves as a barometer of the pandemic’s impact on businesses and the effectiveness of government support measures, received 750 responses and is the largest independent survey of its kind in the UK.
The latest tranche of polling was conducted from 6 - 10 July in partnership with global job site Indeed, prior to the Prime Minister’s announcement on 17 July, setting out the next steps in the Coronavirus response for England.
A slow restart
On average, businesses said they were at 53% of their full pre-Covid 19 capacity. Customer demand (54%) and possible future local lockdowns (52%) were cited as the top two obstacles to maintaining day-to-day operations. 30% said other business costs, such as rent or salaries, were a major obstacle.
The steep decline in business conditions seen at the start of the pandemic is levelling off, but firms still face extremely challenging conditions:
Almost half (46%) reported a slight or significant decrease in revenue from UK customers compared to June.
44% reported a slight or significant decrease in revenue from overseas customers, with34% reporting no change.
56% of firms reported a slight or significant decrease in cashflow.
Concerningly, 43% of businesses reported an increase in late payments from customers when compared with the last six months of 2019.
Flexible furlough and redundancies
Flexible furlough, which allows businesses to bring employees back part time, began on 1 July. 31% indicated they have furloughed staff on a part-time basis, while 56% of firms surveyed said they still have staff furloughed full time.
13% of respondents said they had made redundancies since the beginning of the crisis, with 33% saying they intended to over the next three months. Redundancies were more likely in Business to Consumer businesses, which are experiencing the worst effects of a prolonged period of closure and reduced demand.
Changing business practices
Prior to the Prime Minister’s speech on 17 July encouraging more people to return to offices where they can, 62% of respondents expected some or all of their staff to be working remotely for the next 12 months. This increases to 71% for B2B, and falls to 53% for B2C firms.
Data from Indeed indicates that searches for remote work in the UK have more than doubled since the outbreak of Covid-19. When it comes to job postings explicitly mentioning remote working, the rate has increased from 3% before Covid-19 to 5% now.
Reducing the cost of employment
BCC and Indeed have called on government to act swiftly to reduce the overall cost of employment to protect business and preserve as many jobs as possible in the coming months.The two organisations have called for an 18-month expansion of theAnnual Investment Allowance from £4,000 to £20,000 and an increase the threshold for employer National Insurance contributions from £8,788 to £12,500, which could save businesses around £500 per job.
Commenting on the findings, BCC Director General Adam Marshall said:
“Our findings demonstrate that the UK’s economic restart is still very much in first gear.
“Businesses are grappling with reduced customer demand, an on-going cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead.
“The Prime Minister’s encouragement to return to workplaces and further updates to business guidance will not be enough on their own.
“The time has come for the government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the Revenue. A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions, should both be in the Chancellor’s sights if he wants to help viable companies save jobs as the furlough scheme comes to an end.”
This report first appeared on the British Chamber of Commerce website.
