Companies are concerned about future
A NEW survey has revealed that businesses across the country feel worryingly downbeat about their prospects – and that was before a third national lockdown was announced.
The British Chambers of Commerce Quarterly Economic Survey Q4 2020 revealed business conditions remain weak and show no signs of improvement for the vast majority of firms, including those in the South West.
The study, the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth, found business conditions were weakened in the fourth quarter as the second lockdown squeezed activity.
The bellwether survey of 6,203 firms, employing nearly a million people across the UK, revealed there was no fundamental improvement in the key indicators in Q4 and they remain well below pre-crisis levels; 95% of respondents were SMEs.
Following the sharpest decline in the history of the QES in Q2 2020, all the key indicators in Q4 remained substantially worse than pre-pandemic levels and 79% of hotels and catering firms, an important sector in the Westcountry, reported a decrease in domestic sales in Q4, worsening from 66% in Q3.
Cash flow, a key indicator of business health, continued to deteriorate for 43% of firms overall. For hotels and catering firms, 77% reported a decrease.
The survey took place during the second lockdowns in England and Northern Ireland, and amid tougher restrictions in Scotland and Wales.
Continued uncertainty around further lockdowns and restrictions, as well as the many unanswered questions on Brexit, caused businesses considerable distress, with some saying they are worried about the long-term viability of their ventures.
Smaller firms and independent retailers reported the most pessimistic sentiment, many stating that changes in restrictions, and the introduction of the second lockdown exacerbated cash-flow problems and left them with redundant stock.
Some businesses not forced to close by the lockdown and restrictions were also feeling the effects of the cashflow crisis further up the supply chain, with marketing budgets slashed or diverted to Covidrelated activity. Overall, indicators remained weak in Q4, with only moderate improvement compared to Q3 and still well below the pre-Covid 19 trend. Nearly half of firms (43%) reported decreases in domestic sales, broadly unchanged from 46% in Q3, while 26% of firms reported an increase in domestic sales. In addition, 45% of firms reported a decrease in domestic orders, while 33% report no change, and just 22% reported an increase.
Meanwhile, 38% of firms reported decreases in export sales, down slightly from 45% in Q3 but still substantially worse than pre-pandemic levels, where only around 20% of firms reported a decrease. However, nearly a quarter (22%) of firms reported increases in export sales, up from 16% in Q3 .