Smaller firms fearing for the future

Thousands of small to medium-sized firms in the North East fear for their future over the next 12 months, according to a new business survey.

An estimated 15,855 firms say it is likely their business will close permanently in the next year as a result of the coronavirus crisis – rising to 24,764 in the event of a second national lockdown being introduced, according to a data by Virgin Money.

The latest Virgin Money Business Pulse survey was conducted in early September and found 66% of small and medijum-sized firms said their profits were lower in April because of COVID-19 disruptions – including 21% whose profits took a hit of more than 50%.

Underlining the continuing precarious situation for SMEs, 17% of businesses say it is very likely or somewhat likely they will be forced to close permanently in the next 12 months.

This number rises to 24% when considered in the context of a potential second national lockdown.

Gavin Opperman, group business director at Virgin Money, said: “The results make for sober reading, but they are unsurprising given the extraordinary disruption of the last six months.

"The pandemic has caused the deepest recession on record and recovery is slow.

"The UK’s SMEs have experienced unprecedented strain, with sales and profits affected by workplace closures, supply chain disruption, diminished productivity and declining household incomes.

“On a brighter note, the pandemic may offer SMEs the chance to continue longerterm with the new and more flexible work patterns the pandemic necessitated, helping to rebalance the spread of wealth and opportunity across the country."