Business fears for the future if lockdown goes on months more
ONLY 16.5 per cent of companies in the South West region believe they will survive if social distancing continues for another six months.
Bristol-based chambers of commerce Business West has polled more than 1,100 companies over the past fortnight - and the data, published yesterday, is the biggest regional business survey compiled anywhere in Britain during the coronavirus crisis.
Despite huge government support, many companies are still concerned they will not be able to survive if lockdown continues much longer.
It is the region’s smallest firms – those with five to nine members of staff – which are mainly feeling the pinch.
Phil Smith, managing director of Business West Chambers of Commerce, said: “Our survey spells out just how hard many firms are being hit – the impact of the coronavirus is far worse than the financial crisis of 2008 or any recession we can remember.
“These are critical weeks for the economy and for the fate of many firms.
“We are hearing from the coalface stories of firms, built up by individuals over decades, now looking into the abyss.
“We found plunging confidence in businesses’ belief in their ability to survive over a more prolonged period, particularly among small firms.
“This is a stark reminder of the potential depth of this crisis, with the damage to business risking being cumulatively greater the longer the crisis continues.
“Any exit plan from the current lockdown must be led by the science and by the need to save lives.
“However, our findings suggest that uncertainty and lack of clarity from government may be exacer
❝ We are hearing from the coalface stories of firms, built up by individuals over decades, now looking into the abyss Phil Smith
bating a crisis in confidence in small companies’ view of the future.
“A longer lockdown period would mean we need government support to step up a gear and critically to address the gaps in support for those companies that find themselves unable to access current government support programmes.
“Firms falling through cracks in support packages for a few weeks can be managed, but when these weeks start to become months, they cannot be left unsupported.”, Smith said.
A large number of companies have voiced concerns about their current and future financial position, with confidence in the ability to survive falling sharply when asked to consider the continuation of lockdown measures.
A total of 62 per cent of all firms said they had concerns about their current financial viability, while 88 per cent said they were worried about their future financial position.
Small firms are reporting worse financial impact and greater pessimism about the future than larger firms.
Even with the government’s furlough scheme, many businesses are still taking measures to cut labour costs in order to survive.
The survey found that 37 per cent of all firms said they would be taking or considering taking other measures to reduce labour costs. Of these 37 per cent, the most common actions firms had already implemented or were considering implementing were:
» 79 per cent reducing working hours;
» 65 per cent reducing salaries;
» 60 per cent cutting back on contracted workers;
» 48 per cent voluntary unpaid leave;
» 47 per cent starting redundancies for staff with under two years’ service;
» 33 per cent starting redundancies for staff with over two years’ service.
Mr Smith added: “The furloughing scheme has been a massive lifeline for many firms, but the shock of this economic crisis looks likely to lead to major damage in the labour market and with individual workers.
“Government now needs to think about how we ensure this damage is only temporary and firms are able to drive a recovery that gets back to our previous excellent regional jobs performance.”
Meanwhile some 72 per cent of firms have seen decreased orders and sales, 56 per cent had lost business due to cancelled contracts, 50 per cent said they had cash flow issues and 30 per cent have felt the impact of supply chain issues.