Business leaders have said government support for the economy will be needed throughout 2021, with the economic fallout from the pandemic unlikely to end even after the UK population is vaccinated against COVID-19.
The British Chamber of Commerce (BCC) on Monday night warned the UK was facing a double-dip recession. The leading business lobby said more clarity was needed on long-term support from the government.
“The current drip-feed approach to business support measures is too short term and leaves businesses unable to plan,” said Dr Adam Marshall, director General of the BCC.
“Ministers must set out, now, what additional steps they will take to underpin business cash flow and help viable firms preserve livelihoods until a full reopening of the economy is possible.
“For business, the pandemic doesn’t end simply because vaccines are starting to be delivered. Brexit isn’t ‘done’, either. The sooner the Prime Minister and his colleagues set out a coherent economic plan and longer-term support to help businesses to restart, rebuild, and renew, the better.”
This assessment came as the BCC’s Quarterly Economic Survey (QES) found business conditions remained weak at the end of 2020 as the second lockdown squeezed activity.
The survey of 6,203 firms, who employ nearly a million people across the UK, found no fundamental improvement in any of the key economic indicators. All remain well below pre-crisis levels and close to historic lows.
“Though the vaccine rollout provides real optimism, a new national lockdown means that a significant double-dip recession in the first quarter of this year is looking increasingly likely,” said Suren Thiru, BCC’s head of economics.
Nearly half of firms surveyed by the chambers (43%) reported a decrease in domestic sales in the final three months of 2020. Almost four in 10 (38%) reported decreases in exports, down slightly from 45% in Q3 but still substantially worse than pre-pandemic levels.
Marshall said the government should extend tax holidays and support schemes that are due to expire in the coming weeks and months to prevent more business failures and layoffs. He said big investment incentives were needed to spur a recovery.
“2021 cannot be a year where Britain dithers while others do,” he said.
Chancellor Rishi Sunak outlined a £4.6bn package of business support measures on Tuesday, designed to support firms up to April. Business leaders were quick to warn that many companies and workers would still “fall down the cracks”. Several groups called for more support measures from the government.
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