A survey of businesses in Coventry and Warwickshire has revealed the massive economic repair job that will be required to deal with the fallout of the coronavirus crisis.
The Coventry and Warwickshire Chamber of Commerce’s latest Quarterly Economic Survey (QES) of firms across the city and the county has seen many indicators fall to record lows, including the overall economic outlook for the region.
The survey, which is sponsored by Prime Accountants, is analysed by Warwickshire County Council and feeds into the national survey by the British Chambers of Commerce (BCC).
Warwickshire County Council’s analysis uses a similar score to the national Markits Purchasing Managers Index (PMI) where 50 is the balance and anything above means the majority feel positive and anything below means the reverse.
Each indicator has seen a sharp decline – from domestic orders to overseas orders and from cashflow to employment – meaning an overall economic outlook of 29.2 down from 59.0 in the previous survey.
Business confidence in the service sector fell to 38.4 from 71.1 and, in manufacturing, it dropped to 39.0 from 57.4.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the survey results showed the need for continued government support to bolster confidence as more and more firms return to business.
She said: “The latest QES reveals the true extent of the impact coronavirus has had on the regional economy and some of the record-low indicators show just how tough these past few months have been for firms across our patch
“The fact that cashflow, orders, confidence and the overall outlook have fallen sharply come as no surprise but that makes them no less stark and reveal just how much support and investment is going to be required as we get the economy restarted.”
She added: “Government has been agile in the way it has responded to the crisis in recent months and has offered unprecedented levels of support, often adapting at short notice as gaps in the help were pointed out.
“But what the survey shows is that while the support may have helped many more businesses to survive who would have otherwise failed, more help will be required to build a short, medium and long-term economic recovery.”
The British Chambers of Commerce is calling for the Government to support jobs through substantial reductions in employer National Insurance contributions, to support cash flow through wider business rate reliefs and extended loan and grant schemes as well as supporting young people through wage subsidies for apprenticeships and work experience.
The BCC also wants additional measures for supporting investment in productivity, people and carbon reduction through major incentives, for stimulating demand, through targeted ‘restart vouchers’ for all UK households or a temporary VAT cut.
It also wants streamlined regulatory processes to make life easier for businesses without compromising safety or the environment.
Ms Bennett said the concerns of the business community had been made clear.
She said: “Our members have sent a clear message to decision-makers about their current plight and we are using our voice at a local, regional and national level to call for more support to get them growing again.
“The chamber continues to work with our businesses to build confidence across every sector going forward.
“It is crucial that we understand their challenges and lobby government for the right support to meet each sector’s needs for recovery.”
Steve Harcourt, of Prime Accountants, said: “It is an extremely challenging time for all businesses in our region, however we are proud to be partnered with Coventry and Warwickshire Chamber of Commerce in order to gather this vital information on how companies are managing, adapting and diversifying in the current crisis.
“Not many businesses are immune to the impact of coronavirus, and this is seen in the results of the latest QES.
“The results of the survey show an immediate adverse impact on cash flow for two-thirds of businesses in the region and a pessimistic outlook over the coming months as most businesses strive to return to working at full capacity.”
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Mr Harcourt added: “The Government lifting some restrictions on businesses will help stimulate the local economies, as we see employees return to work from a position of furlough.
“However, there is still the need for sector specific support from central government as the likes of the entertainment and leisure sectors and some of the hospitality businesses struggle to pay bills with no income coming from trade for the foreseeable future.
“Government support for businesses is required to aid the short and long-term recovery and tax breaks would be a good fiscal stimulus for the economy.
“But, I would add, that we must support the key workers and businesses that have helped keep the country going through this crisis.
“Suppliers to the NHS, delivery companies and contractors must not be penalised with tax and red tape as planned and government must look at the flexibility needed in the workforce of the future.”
The findings of the survey were as follows
Overall 29.2, down from 59.0
Service Sector 28.8, down from 60.2.
Manufacturing Sector 30.6, down from 54.0.
Service Sector 14.0, down from 59.4
Manufacturing Sector 20.5, down from 56.7
Service Sector 17.5, down from 48.8
Manufacturing Sector 23.9, down from 47.4
Service Sector 40.8, down from 58.5
Manufacturing Sector 33.3, down from 52.3
Investment & Cashflow
Service Sector 27.2, down from 56.9
Manufacturing Sector 30.2, down from 54.1
Service Sector 38.4, down from 71.1
Manufacturing Sector 39, down from 57.4