42% of businesses have reported a reduced cash flow as sales fail to recover to pre-Covid levels, shows the latest report by Herefordshire & Worcestershire Chamber of Commerce.
The research, completed in partnership with the British Business Bank, has released the results of the latest quarterly economic report which outlines the impact of coronavirus on local businesses.
The results come from the Chamber’s newly launched Economic Report and covers the time period between 24 August-14 September 2020. It is the most current and publicly available report providing detailed insights into the two counties’ business environment.
The increase in sales has recovered from the all-time low recorded in the last quarter, but the percentage remains negative meaning most businesses have experienced fewer sales over the last several months since restrictions were first lifted.
As businesses continue to make tough decisions on where to save costs, unfortunately this has also led to 1-in-4 organisations reducing their headcount.
The business landscape continues to vary considerably by sector. Manufacturers have seen their sales recover at a faster rate than service companies – which includes tourism, hospitality, arts and entertainment. 75% of tourism and hospitality businesses and 63% of those in arts and entertainment have reported reduced cash flow this quarter.
A third of businesses in Herefordshire and Worcestershire expect their turnover to decrease over the next year, and as has been shown repeatedly in previous quarters, where business confidence is low, so are investment intentions. A third of businesses have already revised their investment plans down this quarter worsening already subdued levels.
Adding to the uncertainty is the ongoing EU Exit trade negotiations. Key business issues like potential further administrative costs and level of tariffs are yet to be decided, making it increasingly difficult for businesses to plan ahead for these ambiguous times.
Sharon Smith, CEO of Herefordshire & Worcestershire Chamber of Commerce, said: “The continued uncertainty is having a profound impact on businesses, both in terms of their confidence in future profitability and their willingness to commit to extensive investment plans.”
“The next six months are going to be critical for businesses. Demand needs to continue to improve for businesses to have any chance of weathering the ongoing storm that the pandemic has triggered.”
To read the full report, click here.