Economy remains "in first gear"

UK businesses are still operating at around half of their pre-virus capacity despite the easing of lockdown measures as the economy remains “in first gear”, according to the new research.

The latest British Chambers of Commerce (BCC) coronavirus business impact tracker has revealed that, on average, businesses said they were at 53% of their full pre-Covid 19 capacity.

More than half of firms also cited customer demand and possible local lockdowns as major obstacles to fully restarting day-to-day operations, according to the figures compiled with the job site Indeed.

BCC director general Adam Marshall said: “Our findings demonstrate that the UK’s economic restart is still very much in first gear.”

The survey of firms between July 6 and July 10 revealed that the steep decline in business conditions seen at the start of the pandemic is leveling off, according to respondents.

However, almost half of firms, 46%, still reported a slight or significant decrease in revenue from UK customers compared to June.

It also revealed that 43% of businesses reported an increase in late payments from customers when compared with the last six months of 2019.

Mr Marshall added: “Businesses are grappling with reduced customer demand, an on-going cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead.

“The Prime Minister’s encouragement to return to workplaces and further updates to business guidance will not be enough on their own.

“The time has come for the Government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the revenue.”

Jack Kennedy, economist at Indeed, said: “The slowdown in consumer activity mirrors hiring activity in the UK.

“Today, there are 60% fewer job postings than there were before the outbreak of Covid-19, and so far there are few signs of a V-shaped recovery in vacancies.

“The furlough scheme has been an important lifeline to millions of people but the fear is there will be a sudden rise in unemployment after that umbilical cord has been severed.”

How can you improve your cash flow?

Many companies are missing out on vital funding from government tax incentives. R&D tax credits are one way that companies can improve their cash flow during this season. The scheme is available to all UK businesses who are engaged in qualifying activity and the benefit can see businesses receive up to 33p per £1 spent on research and development. Find out how much you could receive with our tax calculator.

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