Restart of the UK economy 'still in first gear'

Results from the latest BCC Coronavirus Impact Tracker have revealed that customer demand (54 per cent) and possible future local lockdowns (52 per cent) are the top two obstacles to maintaining day-to-day operations. 

Additionally, 30 per cent of businesses reported other business costs, such as rent or salaries, as a major obstacle.

“Our findings demonstrate that the UK’s economic restart is still very much in first gear," said BCC director general Adam Marshall. 

“Businesses are grappling with reduced customer demand, an ongoing cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead."

According to the BCC, while the steep decline in business conditions seen at the start of the pandemic is levelling off, firms still face extremely challenging conditions, with almost half (46 per cent) reporting a slight or significant decrease in revenue from UK customers compared with June.

Alarmingly, 43 per cent of businesses reported an increase in late payments from customers when compared with the last six months of 2019.

The BCC survey also found that flexible furlough, which allows businesses to bring employees back part time, has seen 31 per cent of businesses furlough staff on a part-time basis, while 56 per cent of firms surveyed said they still have staff furloughed full time.

Moreover, 13 per cent of respondents said they had made redundancies since the beginning of the crisis, with 33 per cent 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.

“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," said Jack Kennedy, economist at the global job site Indeed.

"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.”