The majority of businesses across Bath and Somerset will be unable to cope if the coronavirus crisis continues in its current form for the long term, according to the results of a recent survey.
A Business West survey of more than 1,100 businesses across the region highlights the unparalleled scale of the economic impact being faced by companies grappling with the pandemic.
The survey, conducted between 2nd-17th April, shows a high number of businesses with concerns about their current and future financial position, whilst confidence in their ability to survive falls sharply when asked to consider the continuation of lockdown measures.
When asked the question: “Do you have concerns about your financial position due to the impact of Covid-19 currently or in the future?” 62 per cent said that they had concerns currently, whilst 88 per cent said they were concerned about their future financial position.
The survey asked for their views on the viability of their business if the current crisis continues. This shows a very steep decline in their confidence of their ‘ability to cope’, which gets sharper as it moves from one, three and six months, up to a year.
Small businesses are reporting worse financial impact and greater pessimism about the future than larger organisations. The band of small businesses with between five and nine staff members are most pessimistic about their ability to cope in the long term.
James Durie, Chief Executive of Bristol Chamber & Initiative at Business West, said, “Our survey spells out just how hard many firms are being hit – the impact of the coronavirus is far worse than the financial crisis of 2008 or any recession we can remember. These are critical weeks for the economy and for the fate of many firms. We are hearing from the coalface stories of firms, built up by individuals over decades, now looking into the abyss.
“We found plunging confidence in businesses’ belief in their ability to survive over a more prolonged period, particularly among small firms. This is a stark reminder of the potential depth of this crisis, with the damage to business risking being cumulatively greater the longer the crisis continues.
“Any exit plan from the current lockdown must be led by the science and by the need to save lives. However, our findings suggest that uncertainty and lack of clarity from government may be exacerbating a crisis in confidence in small companies’ view of the future. A longer lockdown period would mean we need government support to step up a gear and critically to address the gaps in support for those companies that find themselves unable to access current government support programmes. Firms falling through cracks in support packages for a few weeks can be managed, but when these weeks start to become months, they cannot be left unsupported.”
The survey also showed that, even with the government’s furlough scheme, many businesses were still taking measures to cut labour costs in order to survive.
37 per cent of respondents said they would be taking or considering taking other measures to reduce labour costs. Of these 37 per cent, the most common actions implemented or being considered were:
- 79% reducing working hours
- 65% reducing salaries
- 60% cutting back on contracted workers
- 48% voluntary unpaid leave
- 47% starting redundancies for staff with under two years’ service
- 33% starting redundancies for staff with over two years’ service
James Durie added, “The furloughing scheme has been a massive lifeline for many firms, but the shock of this economic crisis looks likely to lead to major damage in the labour market and with individual workers. Government now needs to think about how we ensure this damage is only temporary and firms are able to drive a recovery that gets back to our previous excellent regional jobs performance.”