The complex question of how businesses will be affected by Covid-19 has been at the centre of debate throughout the crisis. How will workers be affected? Is there access to the necessary finance for those workers that are unable to work, and for businesses that are unable to trade? Which industries will be worst hit and how will they recover?
We are starting to see some answers to these questions emerge. The new Business Impact of Coronavirus (Covid-19) Survey (BICS) is being published bi-weekly by the Office for National Statistics (ONS) and the latest release has collected information from 6,171 businesses across the country. The businesses have been sorted by sector and size, and the survey’s questions relate to their workforces, access to finance (and government schemes), business confidence and financial performance.
A majority of businesses surveyed by the ONS have continued to trade (75.4%), while just less than half have seen abnormalities in terms of turnover and financial expectations. Below are some other important statistics related to trade:
- Accommodation and food service activities and arts, entertainment and recreation were the two industries that saw by far the highest number of respondents who have temporarily closed or paused trading (81.2% and 82.2% respectively). These results are not surprising given the need for the congregation of people in the latter and the number of jobs that cannot be done from home in the former. The majority of respondents in all other industries continued to trade (above 70%).
- Offering a slightly different perspective and larger sample size, data collected by Beauhurst, suggests that of 28,000 high-growth companies, 5.8% (or 1561 businesses) have temporarily or permanently ceased operations as a result of the Covid-19 pandemic. The majority of businesses to have ceased operations came from the leisure and entertainment sector (37.8%) and the industrials sector (18.7%), again unsurprising given the previously stated reasons on congregation and an inability to work from home.
Of the businesses continuing to trade, 5.7% stated that they did not felt confident that they had the financial resources to continue operating throughout the Covid-19 crisis, while 60.4% did feel confident. The rest stated that they did not know. Some other important statistics include:
- As the data summarised in the diagram below shows, 72.5% of respondents from human health and social work activities felt confident.
- The sectors with the highest number of respondents stating that they weren’t confident were the accommodation and food service activities sector (12.6%) and the administrative and support service activities sector (10.3%).
Import, export and access to goods and services
Many still operating businesses have been significantly affected by the crisis in terms of their ability to import and export goods, as well as their access to goods and services. Key statistics include:
- Of businesses continuing to trade whose financial performance was outside of normal expectations, 14.2% stated that importing was not affected, 20.9% said they were affected, with 8.8% stating that they did not know.
- 8.1% of the same businesses stated that exporting was not affected by the crisis. 18.8% stated that exporting was affected, with 6.1% stating that they did not know.
- 42.1% of operating businesses have been able to get what they needed in terms of materials, goods and services while 14.1% have not. 24.2% stated that they have had to change suppliers or find alternative solutions.
Access to finance
A majority of businesses have stated that access to finance has not changed between 23rd March and 5th April. Some other important statistics include:
- The industries with the highest percentage stating that access to finance had increased were arts, entertainment and recreation (17.8%) and water supply, sewerage, waste management and remediation activities (15.9%). Funding from the Arts Council may be the reason for the responses from those in the arts sector.
- 10.4% of those from administrative and support service activities stating that access to finance had decreased, the highest percentage of any sector.
Financial implications and prices
Still operating businesses have understandably experienced abnormal financial performance and turnover during the pandemic, while prices have changed for around a quarter of those for businesses who measure changes in prices.
Compared with data from Beauhurst on over 28,000 high growth businesses, 5.7% of them stated that they were offering products for free or at a reduced cost due to the Covid-19 pandemic. Only 1.3% of businesses responding to the ONS survey have seen prices decrease more than normal.
Most businesses continuing to trade stated that their workforce could meet demands (90.5%), while 7% said demands could not be met.
The diagram below shows that manufacturing and arts, entertainment and recreation were the two sectors that saw the highest percentage of businesses saying that demands could not be met.
One finding from the data (outside of the standard analysis) is that a not insignificant number of businesses do not appear to know how they have been affected yet, with many answering ‘Not sure’ to numerous questions in the survey. Businesses should be able to access necessary information on both their current situation and understand what financial help (or other forms of help) they are eligible for. Where transferable, businesses that have managed to both avoid most (if not all) of the negative effects of the pandemic and operate at a reasonable level should let others know how they have managed to do this.
How this Covid-19 crisis will inform the future of businesses and the economy appears to be twofold: it has highlighted the necessity of preparing for any similar event in the future, but also to look into issues that were regularly addressed in the recent past that have been amplified by the crisis. One of the best examples in this regard is the necessity of upskilling the population in the face of emerging technology and AI, with more emphasis needed in parts of the country with a relatively low-skilled population. In this regard, the Department of Education’s new ‘Skills Toolkit’, a webpage signposting people to free courses such as numeracy, literacy and data analysis, is a welcome step in the right direction.
In the coming weeks and months, collaboration will be more important than ever, with businesses, universities and other institutions needing to pool their resources in order to minimise damage not just to themselves, but to the wider economy.