UK businesses working at half their pre-COVID capacity

Businesses across the UK are on average, operating at half of their pre-COVID-19 capacity on average despite lockdown measures easing, according to the latest British Chambers of Commerce (BCC) Coronavirus Impact Tracker. 

More than half of the firms surveyed by the BCC cited reduced demand and possible future lockdowns as major obstacles to restarting day-to-day operations.

The latest tranche of polling for the tracker was conducted between 6 - 10 July in partnership with global job site Indeed, prior to the Prime Minister’s announcement on 17 July, setting out the next steps in the Coronavirus response for England.

On average, businesses said they were at 53% of their full pre-COVID-19 capacity. Customer demand (54%) and possible future local lockdowns (52%) were cited as the top two obstacles to maintaining day-to-day operations. 30% said other business costs, such as rent or salaries, were a major obstacle.

The steep decline in business conditions seen at the start of the pandemic is levelling off, but firms still face extremely challenging conditions. Almost half (46%) of the firms surveyed reported a slight or significant decrease in revenue from UK customers compared to June. A total of 44% reported a slight or significant decrease in revenue from overseas customers, with34% reporting no change. At the same time, 56% of firms reported a slight or significant decrease in cashflow.

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

Flexible furlough, which allows businesses to bring employees back part-time, began on July. 31% indicated they have furloughed staff on a part-time basis, while 56of firms surveyed said they still have staff furloughed full time.

At the same time, 13% of respondents said they had made redundancies since the beginning of the crisis, with 33% 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.

As a result of the tracker’s findings, the BCC and Indeed have called for swift government action to reduce the cost of employment and to protect businesses and preserve jobs.

Adam Marshall, BCC director general, commented on the findings. He said: “Our findings demonstrate that the UK’s economic restart is still very much in first gear. Businesses are grappling with reduced customer demand, an on-going cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead.

“The Prime Minister’s encouragement to return to workplaces and further updates to business guidance will not be enough on their own.

“The time has come for the government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the Revenue. A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions, should both be in the Chancellor’s sights if he wants to help viable companies save jobs as the furlough scheme comes to an end.”

  • Read all of our articles relating to COVID-19 here.
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