The level of financial support for businesses required to close by law during the most recent lockdown has been found to be grossly inadequate, with government grants covering less than a quarter of businesses overheads according to a survey by Business West.
Fifty-four of businesses across South West England that remained shuttered during the month of November, including restaurants, cafes and non-essential retailers, reported that government financial support failed to cover a quarter of their most basic costs putting jobs and survival on the line.
The quarterly survey, which ran between 5 and 27 November and attracted 497 responses, paints a picture of waning business confidence as the coronavirus pandemic continues:
- Over a third of businesses across the region cut their investment in new plant, research & development, staff training and expansion into new commercial property in the three months to November.
- Half of businesses surveyed reported a further decline in their cash flows from the previous quarter and a consequent increase in indebtedness during Q4, having already endured nine months of financial contraction due to Covid-19.
- Turnover and profitability have generally fallen.
- More than 70 percent of businesses reported that they are operating below capacity, indicative of a decrease in the competitiveness of the overall economy, and the capacity to bounce back in the long term.
- Forty-one percent of businesses expect their profitability to drop over the course of the next 12 months, compared to 32 percent who expect an improvement.
Commenting on the report’s findings and the outlook for the region’s businesses, Phil Smith, managing director at Business West said: “A total of 497 businesses of all sizes and sectors across the region took this survey and the trends are clear - the second national lockdown has deepened the business community’s declining confidence in the economy overall and in their business performance.
“Weak demand and the general economic uncertainty present an extremely difficult environment for businesses to operate and prosper. The economic expectations of the UK economy for the next 12 months are negative for a majority (60 percent) of businesses, with only 15 percent report being confident. These numbers are in line with the expectations published last quarter.
“Twice as many businesses had a negative outlook for the UK economy as a whole in Q4 2020 compared to Q4 2019, driven by a large extent by concerns about general economic conditions and general business uncertainty – a continuation compared to previous quarters and also this time last year. Brexit has been a consistent major factor of concern over recent years.
“Looking forward to 2021 businesses will look to government, both local and national, to deliver a more stable, predictable and commerce friendly environment to support economic recovery. Many businesses will be looking forward to the end of the year hoping 2021 brings a more hospitable outlook.”
On the declining scope and generosity of government financial support available to businesses, the commented: “With lockdown followed by the imposition of Tier 2 and Tier 3 restrictions across our region, the financial support from grants to closed or badly hit businesses is currently far less generous than earlier on in the pandemic. Government may think that these businesses are well catered for, but our polling shows that many are hurting badly.
“As mass vaccinations get underway, now is not the time to skimp on support for local businesses unable to operate normally. If we are a matter of months away from businesses being able to return something approaching normality, why undo all the hard work now?
“While the extension of furlough until the end of March is welcomed, a few more months of comprehensive financial support for businesses hit hardest by the pandemic pales in comparison to the billions already spent by government this year.
“Clearly there is a need for government to balance its books and 2021 will undoubtedly see some tough choices being made. However, with an effective vaccine finally in our grasp, government needs to heed its own general message to the public and hang on in there just a little while longer and continue to support businesses into the spring.”
The full survey can be read at www.businesswest.co.uk/resources/business-west-q4-quarterly-economic-survey-report