This year’s first business survey conducted jointly by North West based Chambers of Commerce shows that businesses are suffering from the dual impact of Covid-19 and Brexit and need continued support to tide them over current difficulties.
The third national lockdown has contributed to a sharp decrease in demand, according to the COVID-19 and Brexit Impact Tracker survey conducted between 18th January and 2nd February by British Chambers of Commerce (BCC). The BCC’s previous survey, the Economic Survey for the fourth quarter of 2020 showed that demand had weakened to levels similar to those recorded in June 2020.
The latest survey results showed that businesses based in the North West faced reduced sales to both domestic and overseas customers. Customer demand has weakened considerably since December and is now at its lowest levels since at the peak of the coronavirus crisis.
Weakened cash positions are another major worry for business with over a quarter of survey respondents saying that they only have enough cash reserves to see them through for the next three months. The survey results show that 48% North West businesses have taken on additional debt to maintain cash flow during the pandemic. The combination of poor cash positions, reduced capacity utilisation and weak demand means that the prospects for capital investment and recruitment remain weak, at least in the short term.
On Brexit, the survey sought to understand the extent to which businesses found it easy or difficult to adapt to changes in trading goods and/or services under the terms of the new UK-EU trade agreement. Three-fourths of businesses that are currently trading with EU markets reported serious difficulties in preparing for the new rules. Of these, 15% are preparing to scale down EU trade because they find the new procedures too complex or costly to comply with.
Chris Fletcher, Director of Policy and Campaigns at Greater Manchester Chamber of Commerce, said: “The third national lockdown has stifled both the supply and demand sides of the economy. It is almost 11 months since the first lockdown was imposed to address the public health crisis. Over that time, many businesses have scaled down and reduced workforce. Some have shut down permanently. The results reveal the extent of reliance businesses have on major support schemes such as the Coronavirus Job Retention Scheme.
“Business is looking to the Budget due to be delivered by the Chancellor next week. It is absolutely imperative that the Chancellor offers an extension to Covid related business support schemes to avoid further business failure and job losses.”