Monday, July 6, 2020

Survey shows the devastating impact of Coronavirus on East Mids businesses

Business performance in Derbyshire, Nottinghamshire and Leicestershire took an unprecedented hit in the second three months of the year as the Coronavirus pandemic sent shockwaves through the region’s economy.

New figures released today (25 Jun) by East Midlands Chamber highlight the extent to which the COVID-19 crisis affected local firms in the second quarter of the year.

The Chamber’s Quarterly Economic Survey for Q2 2020, found that a net -67% of firms reported a decline in UK sales in the three months to June, while a net -50% saw a fall in export sales. Order books also took a hit, with a net -55% reporting a fall in UK orders for Q3, while for exporters, the fall was a net -46%.

In terms of staffing levels, 36% of survey respondents said they had reduced their headcount in Q2, with only four per cent increasing their workforce numbers. And with the Coronavirus Job Retention Scheme starting to phase out in Q3, a further 34% anticipate more staff reductions in the coming three months.

All other key indicators which the survey measures were down significantly when compared to Q1.

The Chamber models the survey data across a range of key performance indicators, including sales and orders, recruitment, cashflow, investment intentions and confidence, to produce a quarterly ‘State of the Economy Index’, which enables it to compare local business performance quarter-by-quarter.

In Q2, the score fell to -411, its lowest level on record and the first time it’s fallen into negative territory. It is the mirror opposite of the peak of +411 that it reached in Q2 2014.

There was, however, some reason for optimism. Firms were asked a series of questions in the survey about how they view their post-Coronavirus prospects, with one in five responding that they anticipated their business to return to 100% or more of its pre-lockdown activity levels by the end of the year. A further 45% said they would achieve this by the end of 2021.

To help them do so, 36% said they would actively look to invest in activity that would help to diversify their offer to access new markets, while 25% said they would invest further in staff training to improve efficiencies.

Chamber Chief Executive Scott Knowles said: “Although national figures published over the past few weeks have given a broad overview of what has happened to the economy in general, the findings of our survey provide the first real, tangible evidence of the impact that Covid-19 has had on businesses across Derbyshire, Nottinghamshire and Leicestershire.

“The speed at which the economy shut down because of the pandemic and the resulting lockdown was unprecedented. Whole swathes of the business community either ceased or dramatically reduced activity, with some yet to get back underway.

“For most businesses, this period has been defined by uncertainty and a wait for much-needed clarity about how and when the economy may unlock and any further health implications this may have.

“The key thing many businesses need right now is focused support to assist in the transition of their staff out of furlough and back into the workplace and to adapt their operations, to help them return to pre-lockdown levels of economic performance as quickly as possible.

“Clearly, there’s a long way to go before the economy can fully recover, and there will be many hard stories at both an organisational and an individual level in the months ahead.

“However, regardless of the individual experiences of businesses over the past three months, many see opportunities to grow and succeed outside of this current period, perhaps taking a different approach to how they do this.

“To help them in this, continuing to support businesses to innovate, diversify, enhance their resilience and think differently must become a central focus of the Government’s policy response as we come out of the pandemic.”

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