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Summary
- A survey by BCC has found that UK’s business conditions were historically poor in Q1 2021.
- But business sentiments in the same quarter were also boosted by government’s lockdown easing rollout and a strong vaccination drive.
- The survey spoke to 6,103 companies employing about one million people across the UK.
UK’s business conditions were historically poor, limited severely by the third national lockdown, in the first quarter of 2021, a survey by British Chambers of Commerce (BCC) stated. However, business sentiments in the same quarter were also boosted by government’s lockdown easing plan and a strong vaccination drive, the Quarterly Economic Survey found.
Also read: Business confidence improves in January, conditions worsen: NAB survey
The survey included 6,103 companies employing about one million people across the UK and found that 83 per cent of companies in the hospitality and catering sector saw decreased domestic sales in the first quarter, up from 79 per cent who reported a fall in the fourth quarter of 2020.
However, about 55 per cent of the companies said turnovers are expected to reach pre-pandemic levels in the next 12 months.
The survey found that all key indicators for business conditions were well below pre-pandemic levels. In the first quarter, the indicators for revival of immediate business conditions continued to remain difficult and deteriorated a little from 2020’s fourth quarter levels. About 40 per cent reported fall in domestic sales in the first quarter while 32 per cent said there were no change and 28 per cent said there was an increase.
Also read: GfK survey records a fall in the consumer confidence index in January
Sectors that had scope to continue operations unhindered through the pandemic reported some improvement, though not to the pre-Covid levels yet. In the marketing and media and professional services space, 35 per cent of both the category of companies said sales in the first quarter were up from 28 per cent and 29 per cent, respectively, in the fourth quarter of 2020. But about 33 per cent and 29 per cent respectively in both the sectors reported drop in sales, compared to 44 per cent and 35 per cent in the previous quarter.
For the services sectors in Q1, the balance of companies that saw increased domestic sales jumped to -18 per cent, up from -24 per cent in the previous quarter. In the manufacturing sector, balance of firms reporting an increase was at -6 per cent from -9 per cent in the previous quarter.
Also read: RICS Survey Reveals Rise in Empty Shops and Office Spaces in the UK
Suren Thiru, Head of Economics, BCC, said that the third lockdown and Brexit-related border disruptions heavily impacted key indicators. He said that consumer-focused services businesses have been impacted by lockdowns and restrictions while professional services companies and businesses that better adapted to work under restrictions, fared much better.
Hannah Essex, co-executive director of BCC, said that the hope of growth reflected in the survey depended on issues like the government stuck to the date announced for re-opening, how successful the vaccination drive is, and continuation of support to businesses that have had to face the worst brunt of the lockdowns.
