- Elevenof the 14 key service sector QES indicators fall to their lowest level in the survey’s 31-year history
- The percentage balance of firms reporting increased domestic and export sales is now substantially lower than the worst quarter of the 2008-09 recession
- Indicators for longer-term business performancedrop to record lows as BCC sets out measures needed to begin UK’s economic recovery
The results of the bellwether survey of 7,700 firms, employing over 580,000 people across the UK, illustrates the full impact of the coronavirus pandemic on the UK economy in the second quarter of 2020.
The service sector saw eleven of the 14 key indicators, including sales, orders and cashflow, drop to their lowest levels on record.
- The balance of service firms reporting increased domestic sales dropped a record 80 points from Q1 2020 and is now 28 points lower than the worst quarter during the 2008-09 recession
- The balance of service firms reporting increased export sales dropped a record 55 points (to –55%) and is now 42 points lower than the worst quarter during 2008-09 downturn
- The balance of service firms confident that turnover will improve over the next year decreased from +38% in Q1 to -36% in Q2
Business-to-consumer (B2C) service sector firms such as retail, leisure and hospitality, were consistently more likely to report decreases across key indicators than business-to-business (B2B) service sector firms.
In the manufacturing sector, nine of the 14 key indicators measuring activity in the sector dropped to its lowest level on record.
- The balance of manufacturing firms reporting improved domestic sales was 62 points lower than in Q1. For the export sales balance, it is 55 points lower
- The balance of manufacturing firms that are confident turnover will improve over the next year decreased from +34% in Q1 to –31% in Q2
Hopes of a swift economic recovery could be dashed, as forward-looking indicators – orders and investment intentions – dropped to record lows for both services firms and manufacturers. Business confidence dropped to its lowest level on record among services firms and declined to its lowest level since Q1 2009 for manufacturers.
Cashflow – a key indicator of business’ health – is at its lowest level, with two thirds of respondents reporting worsening cashflow.
With the economic impact of coronavirus laid bare in this survey, the leading business group has set out the measures firms need from the Chancellor’s economic statement due later this month, including:
- Supporting jobs through substantial reductions in Employer National Insurance Contributions
- Supporting cash flow through wider business rate reliefs and extended loan and grant schemes
- Supporting young people through wage subsidies for apprenticeships and work experience
- Supporting investment in productivity, people and carbon reduction through major incentives
- Stimulating demand, e.g. via targeted ‘restart vouchers’ for all UK households or a temporary VAT cut; and
- Streamlining regulatory processes to make life easier for businesses without compromising safety or the environment.