Glimmer of hope for business according to survey

The number of businesses with a positive outlook for the next 12 months exceeds the number with a negative outlook according to the latest wave of the Opinium-Cebr Business Distress Tracker.

However, despite the marginal improvements the UK is still not out of the woods. The latest Tracker suggests that more than half a million (544,000) businesses are at a high risk of entering insolvency as a result of coronavirus-related disruption - up from 510,000 two weeks ago. The picture varies considerably across sectors. 50% of businesses in manufacturing and construction say that current trading conditions are good, compared to 28% of service sector firms. The survey results pour more cold water on the notion of a V-shaped recovery, as the average anticipated recovery time rises by three weeks to 31 weeks. The pattern observed in recent weeks suggests that the longer the lockdown persists, the longer the recovery will take. The most commonly cited drivers of the delay in raising production are reduced demand from customers, a weakening of business-customer relationships, and reduced access to inputs necessary for production. Meanwhile, 43% of businesses are concerned about a deterioration in the skills and productivity of workers that have been placed on furlough. James Endersby, CEO at Opinium said: “The challenge facing us is the disjointed return to normal. Large numbers are facing disruption to demand from their customers and combined with issues further up the supply chain. Even once lockdown measures are removed business leaders still expect months of hard work until levels of production return to normal. Pablo Shah, senior economist at Cebr, added: “The gradual easing of restrictions in May has helped some businesses to come out of hibernation - particularly in the manufacturing and construction sectors - while providing a more general boost to sentiment throughout the economy. Workforce measures to weather the storm - such as pay cuts and reduced hours - are being reigned in, while less than a third (29%) of businesses have a negative outlook for the next 12 months. “The survey results suggest that many businesses have transitioned from a state of emergency to a state of heightened caution. However, the longer the lockdown lasts, the longer it will take for businesses to rebound. Among firms that anticipate needing more than a month to recover, the 56% fear that financial or operational difficulties among clients or customers will affect demand for their products or services, while 51% are concerned about reduced access to necessary inputs.”