Business survey warns of dual impact of Covid-19 and Brexit

The first survey of Greater Manchester businesses in 2021 by the GM Chamber of Commerce has shown businesses have seen demand reduced by the combined effects of Brexit and a third Covid-19 lockdown.

The Covid-19 and Brexit Impact Tracker survey conducted between 18th January and 1st February indicated businesses in the region have experienced a further decrease in demand. The final Economic Survey conducted by the Chamber’s researchers showed demand at the end of 2020 had weakened to levels similar to the height of the initial coronavirus lockdown that were recorded in June last year. Sales, both domestic and overseas, were now at their lowest level since the peak of the crisis.

Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said:

The third national lockdown that the UK is under and anxiety around newer strains which may require a prolonged lockdown will stifle both the supply and demand sides of the economy.  It is almost 11 months since the first lockdown was imposed to address the public health crisis.

“Over that time, many businesses have scaled down and reduced workforce. Some have shut down permanently. The hospitality sector should have had its busiest season in the year. Instead, hospitality businesses have faced a major loss of sales and revenue.  This is certain to prolong the recovery of city and town centres.”

On Brexit, three-quarters of businesses currently trading with the EU reported to the survey serious difficulties in preparing for new post-Brexit rules; 15% were preparing to scale back presence in EU markets because of the rising costs and complexities of trade. Subrahmaniam added:

It is now clear the trade deal secured in the eleventh hour is not the silver bullet it was touted to be. The devil is in the detail and compliance is not easy. Indeed, commonly cited concerns for scaling back EU trade included increased paperwork and administration costs, border delays and confusion about what rules to follow.

“Over half of survey respondents have taken on more debt compared to a year ago. A quarter of businesses have cash reserves to see them through for less than three months. That being the case, many businesses do not have the firepower to invest in Brexit preparation.

“It is imperative that the UK government does not rush into introducing full customs checks on imports in July. The timescales need to change, and additional support should be made available for businesses who are battling to adapt to new trading conditions. Without flexibility and support, there is likely to be further damage and the path to recovery will remain long and thorny.”