Uncertainty in Demand Biggest Obstacle to UK Business Restart, Survey Shows

July 22, 2020 Updated: July 22, 2020

Customer demand and the possibility of another lockdown are the biggest obstacles for businesses to restart at full speed, new survey data released on Wednesday shows.

The data comes from the latest British Chambers of Commerce (BCC) Coronavirus Business Impacts Tracker survey, which reports on economic conditions on a fortnightly basis.

A total of 750 businesses responded to the latest survey between July 6 and July 10, three-quarters of which were in the services sector.

Just over half of the businesses identified reduced customer demand and possible future lockdowns as major obstacles to restarting operations at full capacity, both caused by the unknown future developments of the Chinese Communist Party (CCP) virus pandemic.

Firms were operating at an average capacity of 53 percent compared to before the pandemic, the survey found.

“Our findings demonstrate that the UK’s economic restart is still very much in first gear,” Adam Marshall, director general of the BCC, said in a statement.

“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.”

Although Chancellor of the Exchequer Rishi Sunak’s job retention scheme has delayed job losses for months, the future unemployment rate does not look promising.

Of the 750 firms, 31 percent of all business and 13 percent of Business to Consumer businesses have furloughed staff on a part-time basis since July 1 when the option to bring back staff part-time began.

The survey also found 13 percent of the firms have made some employees redundant since the start of the pandemic, while 33 percent will do so in the coming months.

“The furlough scheme has been an important lifeline to millions of people, but the fear is there will be a sudden rise in unemployment after that umbilical cord has been severed,” Jack Kennedy, economist at global job site Indeed, said in a statement.

“With one third of companies planning redundancies over the next three months, we will likely see a scramble for available roles as the labour market becomes heavily supplied with people looking for work.”

In the past few weeks, tens of thousands of jobs have already been lost in the UK. Retailer Marks & Spencer on Monday announced it will cut 950 jobs. Pret A Manger, John Lewis,  Boots, Harrods, SSP Group (owner of Upper Crust and other travel food chains), and high street brands Topshop and Dorothy Perkins, are also among the massive wave of job cuts.

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

“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.”

BCC and Indeed, which partnered with BCC to conduct the poll, called for an increase of employer National Insurance contributions from £8,788 to £12,500, which they said could save businesses around £500 per job.

Annual Investment Allowance was suggested to be increased from £4,000 to £20,000.