November 19, 2020
The impact of COVID-19 & Brexit – the recovery & resilience of UK businesses
And unfortunately, if COVID-19 wasn't enough, Brexit is just around the corner. And it’s already impacting businesses negatively.
It is a sign of how commonplace the negative impact of Covid-19 has been on the economic landscape across the UK, that newspaper headlines announcing yet another large business going into administration, store closures, or dramatic staff reductions feels oddly familiar.
While in some ways, Covid-19 and the subsequent lockdown is accelerating some trends which were already in place before it arrived, there is no doubt (and no surprise) that UK businesses, both large and small, are in an operating environment which is beyond challenging. As we live through a second lockdown, for many businesses to reference a Game of Thrones analogy – it’s not simply the case that winter is coming, but indeed, it’s already here.
Savanta has been tracking small, medium and large businesses response to COVID-19 since the start of the first lockdown in March, to understand the impact that it’s had on businesses. Whatever your industry sector, across the last six to eight months, the negative impact of COVID on businesses, both large and small, remains high, with between 70% – 80% saying the impact on their business has been negative at any given time.
And unfortunately, if that wasn’t enough, Brexit is just around the corner. And it’s already impacting businesses negatively; nearly half (46%) of medium and large businesses already feel that Brexit is impacting their business negatively, and the same is true of just over one-quarter (28%) of small businesses.
The Brexit factor is also disproportionately impacting certain industries, with Business and Financial services (39%) and IT, Tech and Telecoms (45%) significantly more likely to say that they’re already seeing a negative impact. Whilst there may be a perception that Tech has done well during COVID with increased demand on their services, it would appear that even in this sector, Brexit is starting to bite.
Further adding to the challenge for businesses is what type of Brexit they should be planning and making adjustments for. While the Government has rolled out recent television adverts warning businesses that ‘Time is Running Out’ and to use their ‘Check, Change, Go’ system – it’s not entirely clear for some businesses what, if anything, will change. As such, businesses are clearly more confident in their preparations for a Soft Brexit, but struggle with knowing exactly what type of Brexit to plan for.
Covid and Brexit – a potent cocktail:
Unfortunately, the natural consequence of two impactful economic events happening almost simultaneously means businesses are forced to look at ways of reducing their cost base, including redundancies. Current redundancy levels already rival those experienced at the peak of the 2008 financial crisis and our data shows that unfortunately, businesses expect redundancies to continue.
Over half of small businesses have anticipated an increase in redundancies as a result of Covid-19 and Brexit within their business, and that rises to 70% for medium and large businesses. At the same time, half (50%) of medium and large businesses anticipate that Brexit will result in redundancies with their business, making this an incredibly challenging time for them, but also the employees that comprise them.
Government confidence (or a lack of)
Finally, in terms of business confidence it’s a challenging situation for the Government as well. Under half (45%) of medium and large businesses are confident in the Government’s current strategy for COVID-19 and even fewer smaller businesses feel the same (37%). Perhaps more worrying for those in Whitehall is how confidence has slowly eroded over time.
That said, with the extension of furlough (announced after fieldwork for this had completed) and the acquisition of a number of promising vaccines, there is reason for the Government to hope that these confidence numbers will start to reverse.
Even with the purchase of vaccines, and planning underway for a rollout, the next few months are likely to be very tough for UK PLC. COVID-19 remains the top of mind concern and even if that fades, Brexit is lurking around the corner, with the effects of both continuing through 2021. The agile innovation and response that UK businesses demonstrated in response to COVID-19 and the lockdown, demonstrate that there is potential for radical positive change across sectors and ways of working.
In our next article, my colleague Stephen Palmer will look at the support businesses have received during the pandemic, and the challenges and implications of home working across small, medium and large businesses.
Webinar – Recovery & resilience of UK businesses:
On Thursday 5th November we hosted our latest webinar, exploring how UK businesses are adapting in the wake of the COVID-19 pandemic, and preparing for the implications of Brexit. The session was recorded, if you’d like to review or share the content please:
• Access the full recording here
• Download a copy of the presentation here
Methodology & data:
Historical data is based on our fortnightly COVID-19 Business tracker, launched mid-March 2020, (650+ businesses, – 400+ small businesses & 250 medium/large businesses.) and newly expanded monthly Business tracker, launched in October 2020 (1,000 businesses – 750 small businesses & 250 medium/large businesses).
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