Friday, 27 March 2020
COVID-19 has eclipsed Brexit as the biggest worry for UK businesses, according to new figures from the University of Nottingham.
The new data shows that 81% of UK businesses reported that COVID-19 is currently one of the top three sources of uncertainty for their business. By comparison, firms reporting that Brexit was an important source of uncertainty for their business fell from 44% in February to 36% in March.
The findings are based on interviews with over 8,000 CEOs and CFO who participate in the Decision Maker Panel (DMP), set up in August 2016 by the University of Nottingham, in collaboration with the Bank of England and Stanford University, to assess the impact of Brexit on businesses with ten or more employees.
It is now one of the largest regular business surveys and receives thousands of responses from business leaders every month.
The data from the DMP released today shows that less than two months ago the main source of uncertainty for UK businesses, was Brexit and the likely trade deal that would emerge between the UK and the EU by the end of the year. Remarkably, the latest results from the March online DMP survey, Brexit has been eclipsed by the uncertainty surrounding Coronavirus (COVID-19).
The data also shows that firms surveyed indicated that on average the chances of a negative impact was estimated at 71% - split more or less evenly between a large impact of more than 10% and a smaller negative impact of less than 10%.
The impact of COVID-19 progressively affected sales of UK businesses through March. The firms that were most heavily impacted were accommodation & food, leisure & tourism and transport & storage, which had attached a higher probability to a large negative impact on sales (-10%) over the next year. Looking at all the responses from the survey as a whole 40% of firms reported a large negative impact on sales.
The survey was carried out between 6 to 20 March. During this period, the cumulative number of confirmed cases of COVID-19 in the UK rose from 160 to about 4,000 and many new measures were announced to try to tackle the spread of the virus. The average probability attached to a large negative impact on sales rose from 25% at the start of survey window to almost 60% at the end, showing the developing impact of COVID-19 through the month of March.
Professor Paul Mizen
Professor Paul Mizen, from the School of Economics at the University of Nottingham, and principal investigator for the project, says:
“The value of the regular online Decision Maker Panel survey of UK businesses is demonstrated by its ability to respond quickly to sudden shocks like COVID-19 and to give an accurate measure of the impact on sales due to increased economic uncertainty.
“Our results, released today, show that COVID-19 is the largest source of uncertainty for UK businesses, eclipsing Brexit, and that the impact is expected to have a large negative effect on sales revenues across the board. Some businesses in sectors such as accommodation & food, leisure & tourism and transport & storage were evidently more exposed and understandably attached a higher probability to large negative effects over the next year.
“The findings confirm in fine detail – sector by sector - some of the indications provided from other sources that UK business activity has been plunging due to the virus. The UK government and the Bank of England have responded quickly to tackle the effects of the COVID-19 shock, and according to the latest results of the Decision Maker Panel survey, these support measures are likely to be welcome and necessary.”
The UK government and the Bank of England have responded quickly to tackle the effects of the COVID-19 shock. It has provided a Term Funding SME Scheme that offers cheap funding for banks that increase lending to Small and Medium-sized Enterprises and a joint HM Treasury-Bank of England lending facility, the Covid Corporate Financing Facility (CCFF), designed to support larger firms needing a bridge to their cash flows due to coronavirus disruption.
At the present time coronavirus is creating an unprecedented level of uncertainty to which the Bank of England continues to respond as appropriate aided by the intelligence gathered from businesses through the Decision Maker Panel and other channels to help policymakers understand what is going on at ground level.
Story credits
More information is available from Professor Paul Mizen from the School of Economics at the University of Nottingham, at paul.mizen@nottingham.ac.uk
Notes to editors:
About the University of Nottingham
Ranked 32 in Europe and 16th in the UK by the QS World University Rankings: Europe 2024, the University of Nottingham is a founding member of the Russell Group of research-intensive universities. Studying at the University of Nottingham is a life-changing experience, and we pride ourselves on unlocking the potential of our students. We have a pioneering spirit, expressed in the vision of our founder Sir Jesse Boot, which has seen us lead the way in establishing campuses in China and Malaysia - part of a globally connected network of education, research and industrial engagement.
Nottingham was crowned Sports University of the Year by The Times and Sunday Times Good University Guide 2024 – the third time it has been given the honour since 2018 – and by the Daily Mail University Guide 2024.
The university is among the best universities in the UK for the strength of our research, positioned seventh for research power in the UK according to REF 2021. The birthplace of discoveries such as MRI and ibuprofen, our innovations transform lives and tackle global problems such as sustainable food supplies, ending modern slavery, developing greener transport, and reducing reliance on fossil fuels.
The university is a major employer and industry partner - locally and globally - and our graduates are the second most targeted by the UK's top employers, according to The Graduate Market in 2022 report by High Fliers Research.
We lead the Universities for Nottingham initiative, in partnership with Nottingham Trent University, a pioneering collaboration between the city’s two world-class institutions to improve levels of prosperity, opportunity, sustainability, health and wellbeing for residents in the city and region we are proud to call home.
More news…