The coronavirus pandemic has exacerbated existing cash flow problems that were hampering businesses during the first quarter of 2020, according to a newly released report.
The latest Quarterly Business Report, published by Greater Birmingham Chambers of Commerce, suggests the region’s manufacturing and service sector firms saw their cash flow levels worsen in Q1, even before covid-19 had fully taken hold.
In the report, which is published in partnership with Birmingham City University, 29 per cent of companies revealed their cash flow had significantly weakened – the joint highest on record since the global financial crisis of 2008.
However, manufacturing and service sector firms reported stability in domestic demand, with levels staying the same as Q4 2019.
Advanced domestic orders followed a similar trajectory, the research said.
There was a four per cent increase in businesses recording an uplift in orders but this was offset by a three per cent rise in the number of firms whose domestic orders fell.
The report comes in the same week that the Government is expected to extend the UK’s lockdown by another three weeks as the nation continues to fight against the spread of the killer virus.
Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, said: “The surveying period for our latest Quarterly Business Report covered the three months to the start of March and clearly the warning signs were there that businesses across the region were facing some extremely tough times.
“Not only did we see a fall in export demand and hiring levels, the most startling development was the number of manufacturers that were struggling to maintain a sufficient level of cash to run a sustainable and profitable business.
“We know from our subsequent research this situation has become even more grave for businesses in all industries as the fallout from the coronavirus crisis has continued to escalate.
“In this exceptional period, the Government has been right to step in to become the insurer and customer of last resort for businesses across the country.”
Prof Julian Beer, deputy vice-chancellor at Birmingham City University, added: “The saying goes that a week is a long time in politics but at the moment a week is an epoch in business too.
“The first quarter’s data largely represents a snapshot of business conditions in the quarter before the coronavirus struck.
“As such, while these are difficult times – particularly those running smaller businesses trying to chart a course through such unprecedented events – such information is crucial.
“Looking forward, it is almost certain that the coming quarter will see dramatic falls in all indicators as the economy has been put into a ‘coronavirus deep freeze’.”