21% of companies surveyed in the first half of July by the Confederation of British Industry (CBI), said they were partly operational and some premises were still closed.
“With businesses gradually reopening, this month’s data seems to point to a turning point for the economy,” said Alpesh Paleja, economist for CBI, one of Britain’s leading business lobby groups.
But many companies, especially those in sectors in contact with consumers, remained in “acute financial distress”, he added.
Britain’s lockdown has slowly lifted since May, with the last major change on July 4, when hotels, pubs and restaurants were allowed to reopen.
However, Prime Minister Boris Johnson on Friday said he was postponing further easing, which would have helped some arts and entertainment venues, due to the increase in cases.
Businesses said on average they were operating at 85% of their usual capacity due to social distancing, compared to 72% when a stricter rule typically requiring two meters distance was in place.
Lack of demand from customers remained the most common challenge for businesses to resume normal operations, the CBI said. More than two-thirds of companies identified it as a barrier to normal operations, down slightly from the three quarters in June.
The Bank of England is due to issue new quarterly forecasts on Thursday, as different sectors of the economy recover at different rates from unprecedented economic damage.
Whether the main obstacle to growth is a lack of consumer demand or the difficulties for businesses to cope with will be key to the central bank’s stimulus decisions later this year.
Reporting by David Milliken; Edited by Andrew Cawthorne
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