Herefordshire & Worcestershire Chamber of Commerce, in partnership with Midlands Engine Investment Fund, have released the results of the latest economic impact report, outlining the impact of Coronavirus on businesses during Quarter 3.
They found that there has been a dramatic increase in sales from the all-time low recorded in Quarter 2. However, that was inevitable as lockdown restrictions were gradually lifted. And even with the increase, most businesses have recorded fewer sales this quarter.
The extent of the recovery has depended a lot on business sector. Retail sales volumes increased by 0.8% in August, the fourth consecutive monthly increase, meaning they are now 3% above pre-pandemic levels in February 2020. Sectors reliant on large gatherings and social spending, such as hospitality and arts and entertainment, have fared much worse. Despite more people taking UK holidays and the popularity of the Eat Out to Help Out Scheme, 50% of tourism and hospitality businesses reported a decrease in UK sales in Quarter 3.
As some businesses have struggled with low demand for a considerable number of months there is increasing pressure on cash flow. 42% of businesses in Quarter 3 reported reduced cash flow, rising to 63% of arts and entertainment businesses and 75% of tourism and hospitality businesses.
The next six months are going to be critical for businesses. With a second lockdown introduced at the start of November the Coronavirus pandemic is continuing to have a negative impact on businesses and society. Adding to the uncertainty is the EU Exit negotiations.
The sustained uncertainty is having a considerable impact on confidence levels and investment plans. A third of businesses expect their turnover to decrease over the next 12 months. And a third of businesses have revised their investment plans down this quarter.
An orderly exit from the European Union and being able to reopen the economy soon are going to be paramount in ensuring businesses can bounce back and face a more positive 2021.
To read the full report, visit the Chamber of Commerce website on the link here.