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A new report from the Centre for Economics and Business Research and Opinium shows how much long-term damage the COVID-19 pandemic may inflict on the UK economy.
One in 10 British businesses say that there is a high risk they will enter insolvency as a result of the coronavirus crisis, according to a report from the Centre for Economics and Business Research and Opinium.
The Business Distress Tracker report, based on a survey of 500 businesses, says this equates to more than half a million (591,000) businesses that have been pushed to the brink. Meanwhile, the majority (51%) of businesses state that there is at least a small risk that they will go insolvent due to the crisis, equating to nearly three million firms across the country.
The report estimates that more than a quarter of a million businesses will not be able to survive if trading conditions remain as they are for another month. Moreover, it says a second wave of infections and a subsequent lockdown could prove fatal for the business community – the survey suggests that one million businesses could not survive three more months of the lockdown.
The survey sheds the first light on how quickly the economy might rebound after the crisis. Businesses on average say they will need six months to return production to pre-crisis levels. One in six firms will need at least a year to recover, with the CEBR predicting GDP is not set to return to 2019 levels until 2022.
It says that, during the first 30 days of the national lockdown, businesses’ profits were down on average 29%.
Pablo Shah, Senior Economist at Cebr, says: “The results of the Business Tracker provide the first glimpse of the deep and long-term scars that the coronavirus crisis is set to inflict upon the UK economy…These figures dash hopes of an immediate bounce-back once restrictions are lifted, and instead point to a prolonged period of subdued output that is set to last for a period of years, rather than months.”
Meanwhile, the Chancellor is reported to be considering a phased withdrawal from the furlough scheme that has retained many jobs during the crisis from July.