Citing responses to its quarterly economic survey, which surveyed 6,410 companies employing 580,000 people, the BCC said the drop in income experienced by two-thirds of hotel and restaurant businesses was far greater than the average drop of 46% in all sectors.
A spokesperson for the BCC said the ‘Eat Out to Help’ program, which ran throughout August and offered discounts on meals in pubs, restaurants and cafes, had a “fairly marginal” impact on the sector as a whole.Almost a third of the companies surveyed expected a drop in turnover over the next year, revealing that a significant minority believe the recovery will take until 2022.
Business surveys have tended to paint a darker picture than other measures of business activity, according to some economists. Bank of England chief economist Andy Haldane has consistently maintained that the recovery has been stronger than expected and that overall activity will be only slightly below its pre-pandemic level by the end of the year. end of the year.
Suren Thiru, head of economics at the BCC, said there had been an improvement from the dramatic drop in activity of the previous three months in the third quarter, but dismissed suggestions of a rapid recovery V-shaped.
He said the The balance of companies in the service sector reporting an increase in domestic sales jumped to -25%, from -64% in the second quarter. The balance showing an increase in export sales fell from -55% to -31% in the third quarter.
Better performance in the manufacturing sector helped raise the average for all sectors, but an increase in the balance of companies reporting improved domestic sales to -15% from -59% was not enough to generate a strong recovery, a he declared.
Thiru also said the Chancellor’s winter economic plan announced last week would likely only provide a short-term boost, while local Covid-19 restrictions on businesses and households remain in place, and that third-quarter earnings may fade as Christmas approaches. .
“The continued weakness in cash flow is of concern as it makes companies more vulnerable to external shocks, including further restrictions,” he said.
In the third quarter, 21% of companies reported an improvement in their cash flow, 34% no change and 45% a deterioration. Businesses also remained reluctant to invest in new factories, machinery and offices, as local lockdowns continued to threaten revenues.
The BCC said 37% reported a decrease in investment in factories, while 46% expected to maintain investment plans which had fallen to historically low levels since the pandemic struck. Only 17% of companies plan to invest, compared to 9% in the second quarter.
BCC chief executive Adam Marshall said most of the investigative fieldwork took place before the Prime Minister said a ‘second peak’ of coronavirus hit the UK on the 18th. September. “Our results clearly show that the economy remains fragile in the face of uncertainty, with the prospect of a difficult winter ahead.
“The economy will need more support, beyond the recent and welcome efforts of the Chancellor. Ministers must stand ready to provide this support and to step up measures to support corporate cash flow and employment. “