As the UK enters its fourth week in lockdown, the financial impact of the coronavirus (COVID-19) has begun to materialise for many businesses. To support individuals and businesses moving forward and to assist them in producing contingency plans, the Office for National Statistics, one of UK’s largest independent producer of official statistics, has provided a useful resource. The organisation has been working to produce experimental statistics, which have been developed to provide early indicators of the impact of the coronavirus in a timely way.
Office for National Statistics (“OFNS”)
The OFNS has begun to produce online weekly bulletins which contain data and experimental indicators about:
- the condition of UK society;
- the economy and
- the impact of the coronavirus pandemic.
This data has been based on information collected and analysed from rapid response surveys sent to businesses across the UK, novel data sources and experimental methods.
The first bulletin was released on 2 April 2020, followed by the latest bulletin on 9 April 2020. This blog will focus and summarise the information on business impact released in the latest bulletin.
The results from the Business Impact of Coronavirus (COVID-19) Survey (“BICS”), for the period prior to lockdown from 9 March 2020 to 22 March 2020, concluded that 47% of responding businesses reported that their turnover was lower than normal for this period. For businesses in the accommodation and food services sector (regardless of employment size), over 90% reported that they were in this category.
The main sectors from those surveyed who have seen turnover lower than normal and attributed this as a result of coronavirus were:-
- wholesale and retail trade;
- accommodation and food services and
- administrative and support services.
However, not all sectors appear to have been so negatively impacted by the coronavirus. Sectors that reported unaffected turnover in this period were:-
- professional, scientific and technical activities and
- information and communication services.
These results should not come as a surprise as the lockdown measures introduced by the UK Government on 23 March 2020 have impacted the daily operations of many organisations. The inability of employees to work from home; a lack of engagement from the general public and/or lack of work from clients will naturally lead to a turnover lower than the norm.
How have businesses responded?
As many businesses have had to shut their offices to be in line with The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, working from home has been the most popular alternative. 48% of businesses who responded to BICS reported that they encouraged their staff to work from home between 9 March and 22 March 2020. This alternative has allowed businesses to continue to provide their services and trade as close to normal as possible.
For businesses who have been severely impacted by the coronavirus and are unable to maintain their current workforce, the UK Government has allowed them to furlough employees under the Coronavirus Job Retention Scheme (“JRS”). As discussed in previous blogs, the JRS is a temporary scheme in place for 3 months, starting from 1 March 2020, which allows business to apply for a grant that covers 80% of their employees’ usual monthly wage costs, up to a maximum sum of £2,500 a month.
29% of businesses responding to the BICS reported that they have had to reduce staff numbers in the short-term. Businesses within the accommodation and food services sector; administrative and support services sector; and the arts, entertainment and recreation sector reported the largest proportions of having to reduce staff numbers in the workforce. As highlighted above, these were the main sectors to have reported a lower than normal turnover.
Steps moving forward
These findings make it clear that the coronavirus has already impacted certain sectors, however to what extent and how widespread this impact will be, remains uncertain. The BICS reported that although 40% of businesses stated that they were confident that they would be able to continue operating throughout the coronavirus pandemic, 15% said they were not confident and 44% said they did not know. The ONFS indicators help to provide a potentially resourceful insight as to what will happen in certain sectors for the foreseeable future and what life may be like after the lockdown has been lifted.
The next bulletin for ONFS is set to be released tomorrow on 16 April 2020
During these unprecedented times, the SPB R&I team are working hard to try to ensure that Government changes and general updates are communicated as soon as possible via our blog. Please find the links below to blogs referred to above and a few more:
- How to manage business risk posed by Covid-19: self-assessment tool:- https://www.restructuring-globalview.com/2020/03/how-to-manage-business-risk-posed-by-covid-19-self-assessment-tool/
- Accessing financial support – updated guide for UK businesses:- https://www.restructuring-globalview.com/2020/04/accessing-financial-support-updated-guide-for-uk-businesses-2/
- UK Directors’ Duties in the context of Covid-19 – UPDATED:- https://www.restructuring-globalview.com/2020/04/directors-duties-in-the-context-of-covid-19-updated/
- Mothballing a business: what issues should a business consider if forced to shut down?:- https://www.restructuring-globalview.com/2020/03/mothballing-a-business-what-issues-should-a-business-consider-if-forced-to-shut-down/
- More detail about the UK Coronavirus Job Retention Scheme:- https://www.restructuring-globalview.com/2020/03/more-detail-about-the-coronavirus-job-retention-scheme/