Latest GM Economic survey reveals impact of Tier 3 restrictions

The Greater Manchester Chamber of Commerce’s latest Quarterly Economic Survey have shown further falls in demand, attributed to the national and ongoing local Tier 3 coronavirus restrictions.

The quarterly survey of nearly 400 businesses across the city region indicated that customer demand and business confidence have both fallen in the past three months, despite a modest improvement during the third quarter of 2020 when coronavirus restrictions were being eased.

The GM Index, the Chamber of Commerce’s economic indicator calculated from the survey, is now it its third successive negative quarter; an 11 point fall was indicated in the latest survey results.

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

It will not be a surprise to many that the GM Index has gone down to -20.7 in Q4. Greater Manchester has been under some form of restrictions since end of July. In October, Greater Manchester went to more stringent tier 3 restrictions. In November, we had the second national lockdown, and the city region is now back in tier 3 restrictions.”

47% of survey respondents reported they were not optimistic about maintaining revenues, and 55% were not confident about margins and profitability. Data also indicated that across all sectors, businesses expected to reduce headcount in the coming months, in line with ONS labour market data. Subrahmaniam continued:

Through our recovery tracker surveys in October and November, we have identified that demand levels have declined to where they were in June. In other words, the gains of the summer have all been lost. The Chamber’s QES data combined with COVID-19 tracker surveys shows the recovery trajectory for Greater Manchester’s economy considerably weakening in the last two months. It is now clear that the recovery from COVID-19 is going to be slow and difficult. Unless there is a substantial improvement in customer demand, businesses will not be able to raise revenues, cash reserves and operational capacity.

“The lack of progress on Brexit is another factor adding to business anxiety. Brexit preparation is inadequate because businesses are facing severe cash pressures. At a time the UK economy is being fundamentally restructured by Covid-19, Brexit uncertainty and the likelihood of a no-deal scenario could serve a dual blow to the hope of recovery.

“We have revised the economic outlook to reflect the latest survey results. Current balances are much lower than initially expected and indicate stagnation. The restructuring of the economy could also lead to reduced employment opportunities.

“Without absolute clarity on how businesses should adapt to Brexit, the combination of additional cost of compliance, Covid-19 related local restrictions and poor festive trade could cause a prolonged period of low business activity levels. For businesses across Greater Manchester, that is a daunting prospect.”