The Times

Coronavirus drags factories and services to record slump British Chambers of Commerce to report

Publication: The Times
30th June 2020

The closely watched British Chambers of Commerce (BCC) quarterly survey will this week show the biggest drop in economic activity since the report was first published 31 years ago.

The survey will show that sales in manufacturing and services fell to record lows in the second quarter of the year, underlining the severe impact of the Covid-19 crisis.

First published in 1989, the BCC's report surveys 7,500 private-sector businesses. This week's update will show that any signs of recovery are some way off, with forward-looking economic indicators such as orders, recruitment, business confidence and investment intentions also declining to historic lows.

The bleak outlook shows the scale of the challenge facing businesses after three months of lockdown.

The economy contracted by 20.4% in April —the steepest fall on record. The wages of about nine million workers are being paid by the government.

Although thousands of hospitality businesses will be able to reopen from next weekend, analysts say much of the pain will be felt in the second half of the year. Widespread job losses are expected when the furlough scheme ends in October.

There are rising concerns about the ability of small businesses to repay debt taken out through government-backed loan schemes. The total lent via bounce back loans, which provide up to £50,000, has reached more than £26bn.

Research by Funding Xchange found that 60% of firms with turnover less than £500,000 last year would struggle to repay the loans, based on their free cashflow.

This article appeared on The Times here.