SURVEY RESULTS INDICATE UK ECONOMY ENDURES
daily update from John Bridge OBE DL
British Chambers Quarterly Economic Survey Q2 2020
The Chambers of Commerce have called for “swift, substantial and immediate action” to bolster the economy, as its Quarterly Economic Survey - the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth - found that UK economic conditions deteriorated at an unprecedented rate in the second quarter of 2020.
It indicates the Chancellor needs to set out a roadmap to recovery as the UK economy endures historic setback.
Some of the key findings:
• Eleven of 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 performance drop to record lows as BCC sets out measures needed to begin UK’s economic recovery.
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.
You can see details of the full economic survey here.
Summer Economic Update – 8 July
On 8 July the Chancellor, Rishi Sunak, will deliver an economic update setting out the next stage in the UK plan to secure the recovery. More on this next week. In the meantime The British Chambers of Commerce has set out the measures firms need from this economic statement. The ideas presented draw on the experience of Chamber business communities throughout the UK and around the world – including those in countries that are easing their lockdowns and have supported members through other major crises.
These can be found here.
Change in state aid rules for government-backed loan schemes
This is important for those trying to access the government loan schemes. The EU has extended its state aid temporary framework to all micro and small companies (less than 50 employees and less than EUR 10 million of annual turnover and/or annual balance sheet total), even if they were in “financial difficulty” on 31 December 2019.
This amendment extends possibilities to support more small companies, including those with particular financial structures, such as those backed by private equity, or who were in a growth phase and so might have appeared to be in financial difficulty on paper.
Measures and guidance in the new amendment will not apply to companies that are in insolvency proceedings, have received rescue aid that has not been repaid, or are subject to a restructuring plan under State aid rules.
ESSENTIAL INFORMATION LINKS ON ALL ASPECTS: