Swindon & Wiltshire Business News

UK businesses operating at just half of normal capacity, Chamber survey suggests

BCC director general Adam Marshall

 

Businesses are operating at half of their pre-Covid 19 capacity on average, despite lockdown measures easing, according to the results of the latest Coronavirus Impact Tracker from the British Chambers of Commerce.

More than half of respondents to the survey cited reduced demand and possible future lockdowns as major obstacles to restarting day-to-day operations.

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 July 6 to 10  in partnership with global job site Indeed, prior to the Prime Minister’s announcement on July 17 setting out the next steps in the Coronavirus response for England.

A slow restart

On average, businesses said they were at 53 percent of their full pre-Covid 19 capacity. Customer demand (54 percent) and possible future local lockdowns (52 percent) were cited as the top two obstacles to maintaining day-to-day operations. Thirty percent 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 percent) reported a slight or significant decrease in revenue from UK customers compared to June.
  • Forty-four percent reported a slight or significant decrease in revenue from overseas customers, with 34 percent reporting no change.
  • Fifty-six percent of firms reported a slight or significant decrease in cashflow.
  • Forty-three percent 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. Thirty-one percent indicated they have furloughed staff on a part-time basis, while 56 percent of firms surveyed said they still have staff furloughed full time.

Thirteen percent of respondents said they had made redundancies since the beginning of the crisis, with 33 percent 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 July 17 encouraging more people to return to offices where they can, 62 percent of respondents expected some or all of their staff to be working remotely for the next 12 months. This increases to 71 percent for B2B, and falls to 53 percent 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 three percent before Covid-19 to five percent now.

Reducing the cost of employment

BCC and survey partners 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 the Annual 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.”

Jack Kennedy, economist at Indeed, said: “The slowdown in consumer activity mirrors hiring activity in the UK. Today, there are 60 percent fewer job postings than there were before the outbreak of Covid-19 and so far there are few signs of a V-shaped recovery in vacancies.

“The furlough scheme has been an important lifeline to millions of people but the fear is there will be a sudden rise in unemployment after that umbilical cord has been severed.

"With one-third of companies planning redundancies over the next three months, we will likely see a scramble for available roles as the labour market becomes heavily supplied with people looking for work.

“For jobseekers looking to bounce back into the workforce, many have turned to searching for remote work in a bid to secure jobs. However, not all jobs can be performed at home and a growing proportion of people are broadening their search by looking for roles farther afield than their local area.”