British firms are still reporting high levels of reliance on government support schemes to help stem cashflow issues, according to a survey by the British Chambers of Commerce.
The organisation's latest Coronavirus Business Impact Tracker reveals that business conditions improved only moderately in the weeks since the UK economy suffered an historic contraction in Q2 2020.
While 38 percent of firms reported improved revenue from UK customers – up significantly from the series low of three percent recorded during the second quarter – more than 1 in 3 of businesses say they have three months or less worth of cash in reserve.
The British Chambers of Commerce is continuing to call for on government significant interventions to protect businesses and jobs.
The barometer – the largest independent survey of its kind in the UK – received 502 responses from UK businesses between August 3 and 7.
Business to consumer firms were more likely to report improvements in UK revenue compared to other sectors, although these gains are from a low base due to lockdown restrictions, later reopening, and pent-up consumer demand.
A smaller proportion of firms (22 per cent) reported a rise in revenue from overseas customers than from UK customers (38 percent) amid continued disruption to global commerce and trade flows.
While there was a slight improvement in the number of respondents reporting a decrease in their cash reserves (50 percent compared to 55 percent), it remains more than double the number reporting an increase (22 percent).
Thirty-nine percent of businesses say they have three months or less worth of cash in reserve.
Commenting on the results, BCC director general Adam Marshall said: “While some firms are seeing improvements in trading conditions, we are still very much in the eye of the storm, with further turbulence ahead.
“As the government’s emergency measures begin to wind down over the coming weeks, and with the prospect of further local lockdowns still very real, businesses across the UK are going to need further support to weather uncertainty over the coming months.
“Slashing the jobs tax by taking steps to reduce the burden of employers’ National Insurance contributions, big new incentives for business investment, and targeted support to help businesses placed under local lockdowns all need to be put in place now.
"Ministers must not wait until the economic storm is once again at fever pitch before they act.”