BCC Coronavirus Business Impact Tracker

First results show heavy toll on UK business communities as majority of firms face cash flow crisis

Results from the BCC’s first Covid-19 Business Impact Tracker paints a concerning, if unsurprising, picture for business communities affected by Coronavirus.

Sharp and significant fall in domestic and overseas revenue for UK businesses
The majority of firms (62 per cent) have three months’ cash in reserve or less
Almost half of respondents (44 per cent) expect to furlough at least 50% of workforce in the next week

The BCC’s new tracker will serve as a barometer of business’ response to the government’s measures and changes to business’ working practices over the next few months. It will also track how quickly new government interventions, introduced to deal with the real-world impact of this crisis, are getting to the businesses at the front line.

The first set of polling was conducted from 25-27 March with responses from over 600 businesses. It revealed that a majority of firms reported a significant decrease in their revenue from both the UK and overseas.

Cash flow concerns

Of most concern is the impact on business’s cash flow, an important indicator of overall economic health. 18 per cent reported less than a month’s worth of cash in reserve, while 44 per cent reported only 1 to 3 months’ worth of cash in reserve. Only 6 per cent of respondents reported over 12 months’ worth of cash in reserve.

Businesses furloughing employees

Following the government’s pledge to cover 80 per cent of a furloughed employee’s salary up to £2,500 a month, 32 per cent of respondents said that they were planning to furlough between 75 to 100 per cent of their workforce over the next week. More than a quarter of firms (26 per cent) were not due to use the scheme in the next week.

Changing work practices

A majority of businesses have embraced the changes in working culture, with two thirds of respondents (66 per cent) using remote working and half (50 per cent) using videoconferencing.

However, 18 per cent of businesses had closed operations temporarily and, although no respondents had yet closed business operations permanently, both figures are expected to rise over the coming weeks and months.

Awareness of government support schemes

Encouragingly, most businesses reported awareness of the government’s recent support schemes to help mitigate the impact of coronavirus.

61 per cent of firms knew details of the business rates holiday for the retail, hospitality and leisure sector
59 per cent of firms knew details of the Coronavirus Business Interruption Loan Scheme
57 per cent of firms knew details of the Statutory Sick Pay refund
The percentage of firms actively in receipt of this support was low but this is expected to rise in the coming weeks following the government’s official launch of the Coronavirus Business Interruption Loan Scheme and Job Retention Scheme on Monday 23 March.

Responding to the tracker results, BCC Director General Dr Adam Marshall said: “The Coronavirus pandemic has taken a heavy toll on business and economic activity across the UK.

“While businesses have welcomed the unprecedented size and scope of the government support packages, our findings highlight the urgent need for that support to reach businesses on the ground as soon as possible. The majority of firms cannot wait weeks or months for help to arrive.

“There’s no escaping the scale of the challenge UK businesses are facing, yet many are already finding ways to contribute to the national effort to tackle coronavirus. Chambers and their members are working together to play their part, including gathering unused PPE equipment from local businesses and delivering them to the NHS. I’ve no doubt we will see further examples of resilience and innovation – the hallmarks of the UK business community – in the coming weeks and months.”

Nic Redfern, finance director at KnowYourMoney.co.uk, said: “The BCC’s new Coronavirus Business Tracker might not make for pretty reading in the weeks ahead. But it’s an important and useful tool that will provide us with a window into the impact of COVID-19 on the private sector.

“In truth, it’s still really early days. Some of the Government’s financial support schemes are yet to come into action, while business leaders also need time to understand exactly which ones could help in their situation and how to access them. Plus, we’re likely to see more Government intervention over the month ahead.

“As such, we shouldn’t panic. Rather, preparation and education are extremely important at this time. Businesses must assess their options and then take the necessary action, which may include making cutbacks, furloughing staff or accessing business loans – leave it too late, and such actions will be in vain, so making and implementing an informed strategy as soon as possible is key.”

Ritam Gandhi, Founder and Director of Studio Graphene, said: “Many businesses today are grappling with the biggest challenge they have ever faced; adapting to the new reality of the COVID-19 pandemic. With smaller reserves to fall back on and an uncertain outlook, startups and SMEs will undoubtedly be concerned about what the coming months will bring. From pre-seed startups seeking investment, through to established businesses reeling from supply chain disruptions – we desperately need to find ways to help businesses stay afloat.

“I want to see the private and public sector working together to give early-stage businesses the financial breathing space they need. Indeed, while the Government has extended support to UK businesses through measures such as the Coronavirus Business Interruption Loan Scheme, there is doubt as to whether the benefits of such schemes extend to deliberately loss-making firms; by and large, early stage businesses that must focus on investing before they can scale and start turning a profit. Beyond this, we must help all businesses support their employees as they adapt their working practices and, in many cases, adjust to remote working. Investing in the wellbeing of employees at a time when most are caught in the middle of an unprecedented transition, will help see businesses through these difficult times with a strong team intact.

“If we don’t take action now and offer security to innovative businesses that are hungry for growth, we risk stifling innovation and damaging the wider economy. This is an outcome we must seek to avoid if the UK is to retain its coveted status as a global leader in entrepreneurship.”

William Garvey, Managing Director of Leyton UK, said:

“The figures revealed today by the British Chamber of Commerce show the vast scale of furloughing of employees as businesses face this unparalleled challenge. It presents an extremely difficult situation for both employers and employees as the UK economy effectively grinds to a halt, placing millions of people in deeply uncertain circumstances.

“Ultimately, furloughed employees need reassurance that their employers have the short-term cashflow they need to survive beyond the coming weeks. While the measures put in place by the government go some way to supporting firms, it is still unclear whether thousands of businesses will be able to access the cash they need in time to stay afloat, putting many more jobs at risk. Businesses must explore all available funding options at this time; R&D tax credits are one option that can put thousands of pounds in the hands of businesses quickly at a time when urgent access to cash has never been more important.”