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One-Quarter Of Businesses Expected To Restart Trading In The Next Four Weeks

One-Quarter Of Businesses Expected To Restart Trading In The Next Four Weeks
05 June 2020 | Updated 11 June 2020
 

Since lockdown started to restrict our movements, the ONS has been monitoring the impact COVID-19 has had on UK businesses.

Let’s examine some of the key findings so far, and look to what these might indicate for Britain’s economy.

 

A Steady Decline In UK Businesses That Have Paused Trading

 

Shortly after social distancing measures were introduced, the ONS’ Business Impact of Coronavirus Survey (BICS) found that a quarter of UK businesses had temporarily closed or paused trading.

Since then that proportion has gradually declined to just under a fifth (18%) in the latest period.

The below chart shows the percentage of all responding businesses who have temporarily closed or paused trading by survey wave, and current expectations of restarting.

 

Image

 

Picture: A bar chart showing a steady decline in UK businesses that have paused trading. All percentages are a proportion of the number of businesses who responded to each particular wave. Response rates can vary between waves which could impact on differences Expected restarting dates are based on final Wave 5 responses from the point of completion of the questionnaire (18 May to 31 May 2020)

 

This data reveals that:

 

  • 25 per cent of businesses said they expected to restart trading in the next four weeks, and another 30 per cent in more than 4 weeks
  • However, almost half (45 per cent) of paused businesses answered that they weren’t sure when they would be able to restart trading, reflecting the high levels of uncertainty that many UK businesses continue to face
  • In real estate, water & waste, and professional, scientific and technical services, fewer than 5 per cent of businesses have paused trading
  • Information and communication, transportation & storage, and manufacturing were only a little higher
  • Around three-quarters of businesses in accommodation & food services, arts, entertainment and recreation have temporarily closed
  • The vast majority of these expect their businesses will continue to be on hold in four weeks’ time

 

Cash Reserves

 

In the latest BICS survey, respondents were asked how long they felt their enterprise’s cash reserves would last.

Four per cent said they had no cash reserves, with another four per cent saying they had less than one month’s reserves. However, over a fifth (23%) said they had enough for one to three months. 

In total, almost one-third of UK businesses said they only had enough cash reserves to survive three months or less. Another quarter said they were not sure how long their cash reserves would last.

Accommodation, food services, arts, entertainment & recreation businesses were again most vulnerable, with over half of these businesses having three months or fewer in cash reserves to rely on.

 

Preparations To Reopen

 

The ONS has stated that they will continue to monitor businesses’ experiences closely and will update their questionnaire to capture how they are preparing to re-open.

Grant Fitzner, Chief Economist and Director of the ONS’ COVID-19 response offered some positive news regarding the business surveys:

“To date our business surveys have found only a very small proportion (0.5 per cent or less per survey wave) of businesses reporting that they had permanently ceased trading. 

“But those firms who don’t consider they’re able to restart trading any time soon, or who have fast depleting cash reserves, face an uncertain future. How they fare will have consequences not just for their business and employees, but for the wider UK economy and society.

Picture: A photograph of an "Open" sign

Article written by Ella Tansley | Published 05 June 2020

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