Credit, Collections & Insolvency News
The Office for National Statistics (ONS) has published its latest set of economy indicators on the Business Impact of Coronavirus in the period 4th May to 17th May 2020.
The findings show that 42% of businesses responding to the Business Impact of Coronavirus Survey (BICS) had less than 6 months of cash reserves, while 79% had applied for the Coronavirus Job Retention Scheme.
Businesses who had temporarily paused trading between 4th and 17th May, manufacturing and construction industries had the highest proportion of businesses expecting to restart in the two weeks following responding to the survey, at 36% and 35% respectively.
Commenting on the findings,Markus Kuger, Chief Economist at Dun & Bradstreet said “Dun & Bradstreet has upgraded its rating outlook for the UK from ‘deteriorating rapidly’ to ‘deteriorating’ as the government starts to lift coronavirus lockdown measures. As ONS data reveals, 16% of businesses that temporarily closed or paused trading, expect to resume trading operations within the next two weeks while another 9% anticipate opening in the next 2-4 weeks. While we are likely to see an uptick in business activity throughout June as the government is gradually scaling back some lockdown measures, social distancing will remain in place for the foreseeable future, and Dun & Bradstreet forecasts real GDP to contract by a stark 7.0% in 2020.”
“Small and Medium sized businesses make up 99% of the UK’s private sector businesses, and their recovery will be paramount for the economy. Prior to the outbreak towards the end of last year, we found SMEs were owed an average of nearly £75,000 at any one time in the last 12 months, and over a third (34%) said timeliness of payments from customers had an impact on their future financial success.”
“Worryingly but not unsurprising, our latest data and analysis found that, after several quarters of improvements, payment performance in April deteriorated across the board for all industries and as we anticipate a severe recession, we expect an increase in the number of business failures in the next few quarters and B2B payments performance will also continue to deteriorate. With 42% of all businesses that have not permanently stopped trading reporting they had cash reserves to last under six months, ensuring that they remain solvent with access to finance is going to be critical for their recovery and future.”