Professor Dylan Jones-Evans, University of South Wales
Professor Dylan Jones-Evans looks at the latest statistics on how the business community is coping with the current pandemic.
As politicians start examining the potential for reopening the economy as the rate of infection from Covid-19 decreases within the population, it is worth examining the latest data on business performance from the Office for National Statistics which surveyed 6364 businesses surveyed in the first two weeks of last month.
Despite doom and gloom over the UK economy, the statistics actually show that only 0.3% of responding businesses had permanently closed since the pandemic started. In fact, 82% of UK businesses are still continuing to trade with the highest proportion found in England (84%) and the lowest in Northern Ireland (76%).
In Wales, 79% of businesses are still trading during the current lockdown although a higher proportion are trading at a far lower turnover than prior to the lockdown, especially compared to the other three nations i.e. 67% have seen a decrease in their turnover (vs 62% for the UK) with 29% losing half or more of their sales (vs 26% for the UK).
A clear sectoral difference has emerged over the last three months in relation to the ability to continue business as normal, albeit with a reduction in sales.
For example, those industries where it has been easy to switch working from the office to the home, such as higher level service businesses, have continued to operate successfully e.g. 97% of professional, scientific and technical activities are currently trading.
In contrast, the two industries that have been affected the most since the lockdown – accommodation and food service activities, and arts, entertainment and recreation – have seen four out of five firms have temporarily closed or pausing their trading.
And for those still operating under the current restrictions, two thirds of firms in these sectors have experienced more than 50% decrease in turnover as compared to only 25% for UK industry as a whole.
With only one in five firms currently operating, the clearly suggest that there will need to be a considerable effort by both the UK and Welsh Governments to provide further assistance to hotels, restaurants, music venues and pubs especially as four out of ten businesses in the social economy sector are unsure about when they will open again.
Whilst some have spoken about the increase in online business during the pandemic, the statistics do not support this hypothesis. For example, of those firms surveyed, 69% do not have online sales with only one in 12 experiencing an increase in business through this medium (predominately in retail). However, when it comes to utilising online services to support business operations during the Covid 19 pandemic, two thirds of firms have increased video conferencing via platforms such as Zoom or Microsoft teams to support internal communications.
In contrast, a far smaller proportion (30%) have increased the use of online services to communicate with customers and only 10% have increased online advertising.
Finally, the UK Government has introduced a range of different support mechanisms to help businesses during the current pandemic with the Job Retention Scheme (where employees are furloughed) being the most popular intervention.
More importantly, 75% of all firms surveyed indicated that access to this support had enabled their business to continue trading. However, the question going forward is what will happen when these interventions are relaxed and businesses are expected to go back to the way they operated prior to the pandemic?