Personal Law

Businesses ‘operating at half capacity’

Estimated read time: 2 mins

Carrie Tennick, July 22, 2020

UK businesses are operating at around half the capacity they were running at before the COVID-19 pandemic hit, despite lockdown being eased.

This is according to the British Chambers of Commerce (BCC) Coronavirus Impact Tracker survey.

The BCC found that more than half of the companies it surveyed blamed reduced customer demand (54%) and potential future lockdowns (52%) for their drop in operations.

Cashflow concerns

The survey, which was carried out in partnership with job site Indeed, found that businesses were still only at 53% of their pre-COVID-19 capacity.

As well as reduced demand and future lockdowns, 30% of firms surveyed reported that other business costs, such as rent and salaries, were “a major obstacle”.

According to the BCC, 46% of firms reported a decrease in revenue from UK customers compared to June, while 56% reported a drop in cashflow.

Impact on jobs

COVID-19’s impact on jobs has been significant. Some 13% of survey respondents said they had made redundancies since the pandemic began, while 33% said they intend to over the coming three months.

As a result of the findings, the BCC and Indeed have called on the government to “act swiftly to reduce the overall cost of employment to protect businesses and preserve as many jobs as possible”.

They have called for an 18-month expansion of the Annual Investment Allowance from £4,000 to £20,000 and a rise to the threshold for employer National Insurance contributions from £8,788 to £12,500. This could save businesses roughly £500 per job.

BCC Director General Adam Marshall said: “The time has come for the government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the Revenue.

“A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions, should both be in the chancellor’s sights if he wants to help viable companies save jobs as the furlough scheme comes to an end.”

Jack Kennedy, Indeed economist, added that there are currently 60% fewer job adverts than there were before the pandemic began.

He went on to say that with one-third of companies planning redundancies in the next three months, the job market can expect to see a “scramble for available roles as the labour market becomes heavily supplied with people looking for work”.

Employment law

If you have been struggling with an employment law issue, from a dispute requiring an employment tribunal to a wrongful dismissal, you can get help.

First4Lawyers works with specialist employment solicitors to ensure that you are treated fairly and legally. To find out how we can help you, just give us a call, request a call back or make an enquiry online.

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