ONS COVID-19 Briefing: Business insights and impacts on the UK

The impact of the coronavirus pandemic and EU transition period on UK businesses and the economy. Based on responses from the voluntary fortnightly business survey (BICS) about financial performance, workforce, prices, trade, and business resilience.

Key Points

  • Of the businesses currently trading in the accommodation and food service activities industry, 8 in 10 have experienced a decrease in turnover in the last two weeks, compared with normal expectation for this time of year.
  • The proportion of businesses' workforce on furlough leave increased to 18% in mid-January 2021, though this is considerably lower than during the first national lockdown (starting in March 2020), where 30% of businesses' workforce were on furlough leave in early June 2020 (when comparable estimates began).
  • The main challenge reported for exporting goods was changes in transportation costs (34%) and, for importing goods was disruption at UK borders (35%); while 46% experienced no challenges at all.
  • The percentage of businesses experiencing the top three biggest challenges (a change in transportation costs, disruption at the UK borders, customs duties, or levies) for exporting and importing has increased from Wave 22 to Wave 23.
  • Most businesses that had sent goods from Great Britain to Northern Ireland in the last two weeks had not made any changes to their main route for sending these goods (87%), which was from Great Britain directly to Northern Ireland.
  • Of businesses currently trading and who had sent goods from Great Britain to Northern Ireland both in the last 12 months and in the last two weeks, 38% had a decreased volume of goods being sent in the last two weeks

Context

Trading status

The percentage of businesses currently trading remained low at the end of January 2021 at 73%, like levels seen in early July 2020, when coronavirus (COVID-19) restrictions were also widespread across the UK. This is compared with 84% of businesses currently trading in mid-December 2020.

The sustained low percentage of businesses currently trading, in comparison to mid-December 2020, is mainly due to the continuation of coronavirus (COVID-19) restrictions.

Financial performance

The percentage of businesses experiencing a decrease in turnover in the last two weeks, compared with normal expectation for this time of year, has risen from 42% in December 2020 to 46% in January 2021. This increase is likely due to the introduction of tighter coronavirus restrictions in Scotland and England from 4 January 2021, as well as the continued restrictions in Wales and Northern Ireland.

Prior to August 2020, when the original COVID-19 restrictions were in place, the percentage of businesses experiencing a decrease in turnover was consistently above 50%, reaching 65% in early June (when comparable estimates began).

Conversely, the percentage of businesses whose turnover has not been affected is 38%, consistent with data from November 2020.

Business Resilience

The percentage of businesses with three months' or less cash reserves (including no cash reserves) has remained consistent throughout January, at 32%. Over the summer of 2020, the share of businesses with three months' or less cash reserves (including no cash reserves) were broadly flat at approximately 27%, before slowly picking up from the end of October 2020 to its current levels.

Conversely, 35% of businesses reported having more than six months' cash reserves at the end of January 2021. The percentage of businesses with more than six months' cash reserves has remained consistently between 31% and 36% since comparable estimates began at the end of June 2020.

Workforce

The proportion of businesses' workforce on furlough leave increased from 11% in early December 2020 to 18% in mid-January 2021.This 18% of businesses' workforce on furlough leave is considerably lower than during the first national lockdown, where 30% of businesses' workforce were on furlough leave in early June 2020 (when comparable estimates began), and in late April 2020 when unweighted estimates suggest 31% were on furlough.

This may be due to multiple factors, including some businesses having since adapted to COVID-19 related restrictions. The lowest proportion recorded was 8% in early October 2020.

The 18% of businesses' workforce on furlough leave in mid-January 2021 equates to approximately 6 million people.

Exporting and importing challenges

Of currently trading businesses, 15% had exported in the last 12 months and 14% had imported in the last 12 months.

Of these, 88% reported how their exporting compared with normal expectations for this time of year and 84% reported how their importing compared (this works out to 13% and 12% of all currently trading businesses, respectively). These businesses were then asked about the challenges they had experienced with exporting or importing in the last two weeks.

The majority of internationally trading businesses responded that they did not experience any challenges with exporting or importing, at 46% each.

Of businesses that had exported or imported goods or services in the last 12 months, and of whom reported how their exports or imports compared with normal expectations for this time of year:

  • 34% experienced exporting challenges and 30% experienced importing challenges because of a change in transportation costs (reports suggest a surge in shipping costs between China and Northern Europe over recent months)
  • 25% experienced exporting challenges and 35% experienced importing challenges because of disruption at the UK borders
  • 26% experienced exporting and importing challenges because of customs duties or levies