May 19, 2020

1 in 10 retailers facing imminent collapse as economic damage accumulates

  • Anticipated business recovery time increases to 28 weeks, suggesting the longer lockdown persists, the longer it will take to rebuild
  • Despite this, more than two-fifths of businesses (41%) report a positive outlook for next 12 months, offering a glimmer of hope for economy

 

One in ten businesses in the wholesale and retail sector (9%) are facing imminent collapse as they state they will not survive another month of the lockdown, according to the latest wave of the Opinium-Cebr Business Distress Tracker.

 

Further to this, the long-term damage to the economy continues to accumulate as the time that businesses anticipate they will need to recover from the crisis is now 28 weeks. This is a 3 week increase since the last Tracker, just a fortnight ago, and suggests the longer the lockdown persists, the longer it will take for businesses to rebuild.

 

Business Distress Tracker topline results

 

  • Despite the damage that is piling up, there is a glimmer of hope that some businesses have made it through the lowest point of the coronavirus crisis, as more than two-fifths (41%) reported a positive outlook for the next 12 months. This is the first time during the crisis that the number of businesses with a positive assessment of future conditions has outweighed the number with a negative assessment.
  • However, even though there are improvements in sentiment, conditions remain extremely challenging by any historical standard, and more than half a million (510,000) businesses are at a high risk of entering insolvency.
  • The severity of the crisis varies between sectors. While, nearly one in ten (9%) businesses in the wholesale & retail sector state that they will not survive another month of the lockdown, manufacturers appear more resilient.

 

The Opinium-Cebr Business Distress Tracker checks the pulse of the UK business community on a fortnightly basis, as firms across the country grapple with the unprecedented challenges brought about by the coronavirus crisis. The Tracker is based on a survey of 500 business across the country, representing a broad range of industries and business sizes.

 

Pablo Shah, Senior Economist at Cebr said “The latest results of the Tracker show that long-term damage to the economy is stacking up. Businesses now anticipate needing 28 weeks after restrictions are lifted to return to pre-crisis levels of production – 3 weeks longer than in the previous edition of the Tracker. Meanwhile – at more than half a million – the estimated number of businesses at high risk of insolvency remains alarmingly high.

 

“With that being said – while present conditions remain challenging to the extreme – the survey results suggest that we could perhaps be starting to see some break in the clouds. More than two in five companies now describe their prospects for the next 12 months as positive, while assessments of current trading conditions have also picked up marginally.”

 

James Endersby, CEO at Opinium said “We are all going through the most immensely challenging time and all businesses are doing their best to keep their head above water. The good news is that there is no further bad news, with businesses adapting to life in lockdown as best as they can, but it is hard to avoid the large number still facing the risk of insolvency.

 

“Another ray of hope is that B2C businesses appear to be responding to steadily rising consumer demand by bringing some of their workers back from furlough. However, the incredibly challenging trading conditions across the board means that B2B businesses are yet to see any noticeable improvement in their outlook.”

 

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