stopped job hunting during the pandemic look to return to the workforce as restrictions ease. Although the furlough scheme will limit the peak
in job losses, the uneven economic damage caused by coronavirus may drive a two-track jobs market recovery, with skills shortages in sectors where activity rebounds quickly, but with young people now entering the workforce and those whose lost their job during the pandemic at particular risk of longer-term unemployment. With many fi rms struggling with the damage
done to their cash fl ow and revenue by over a year of coronavirus restrictions, the risk of a marked rise in insolvencies as government support winds down remains uncomfortably high. Without additional support, the rebound will only be short lived. T e economic scarring caused by coronavirus,
including elevated private sector debt levels, high structural unemployment and weak investment, may mean that the recovery is slower than many, including the Bank of England, currently predict. It may also mean that the recovery is dramatically uneven across different sectors, locations and cohorts of people.
Sectoral damage In Q2 2020, the fi rst quarter after the crisis began, key indicators from the BCC’s Quarterly Economic Survey saw the largest and sharpest declines on record. For instance, 73% of businesses overall reported decreased domestic sales, 72% reported
decreased export sales and 64% reported decreased cash fl ow. However, the picture has been even worse in consumer-facing
industries such as the hospitality and catering sector. 94% of these fi rms reported decreased domestic sales and decreased cash fl ow. T e collapse in revenue has meant that these fi rms are among the least able to retain and recruit staff and are amongst the most reliant on government support for survival. T ese fi rms have also been least likely to show signs of recovery in
subsequent quarters. In the most recent data for Q1 2021, for example, 81% of hospitality and catering fi rms reported decreased cash fl ow, compared to 41% overall. As well as consumer-facing industries bearing the brunt of the crisis,
smaller fi rms have also been disproportionately aff ected. For instance, businesses with fewer than 50 employees have been consistently more likely to report worsening cash fl ow. In Q2 2020, the BCC’s QES found that while 57% of medium and
large fi rms reported decreased cash fl ow, this fi gure rose to 65% for small and micro fi rms.
Two-speed recovery for local communities Whilst business confidence and employment intentions are rebounding to a degree, taken together, the trends we have described here create serious problems for many local communities. For example, areas which are heavily dependent on the worst-aff ected sectors are likely to struggle more than others which, might lead to ‘levelling down’ compared to areas that rely on, for example, the services sector. With all the other factors taken together, we foresee clear risks to the recovery and to our communities of an uneven recovery.
To see the full report and the Chamber network’s recommendations to government visit: Rebuild - Build Back Stronger.pdf (
chamber-business.com)
ALL THINGS BUSINESS 27
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