Business confidence sinks to 2008 financial crash low, survey shows

Business confidence sinks to 2008 financial crash low, survey shows
By: Business Posted On: May 29, 2020 View: 204

Business confidence sinks to 2008 financial crash low, survey shows

Business confidence fell to its lowest level since the 2008 financial crash in May, according to a survey for Lloyds Bank.

The High Street lender said its monthly business barometer dropped to -33, matching the record set in December 2008, reflecting reduced optimism about the economic outlook amid the COVID-19 pandemic.

A woman wears a face mask and surgical gloves while carrying a bag and walking passed closed small businesses on High Street
Image: The UK remains on course for a historic recession due to the coronavirus

It comes as the UK remains on course for a historic recession, caused by the coronavirus crisis and resulting lockdown.

The government is now seeking to restart the economy by encouraging businesses to return to work and next month a wider range of shops will be able to reopen to the public.

Lloyds economist Hann-Ju Ho said: "Despite the results partly capturing the period since the government's announcement of an initial easing of restrictions, trading conditions remain difficult for most firms."

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Meanwhile, a separate study has suggested a quarter of manufacturing firms plan to make redundancies in the next six months after orders nose-dived because of the outbreak.

Industry body Make UK, which canvassed the companies, said businesses are bracing themselves to have to make "substantial" job cuts in the face of plunging demand and growing pessimism about a return to normal trading.

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The group is calling for the creation of a national skills task force to retain skills by redeploying workers who have lost their jobs to other companies as well as enabling them to be retrained.

Of the firms planning redundancies, more than a quarter involve up to half their staff, according to Make UK.

Almost a third of the 224 companies surveyed said they have seen their orders decline by up to 50% during the COVID-19 crisis.

The study also found increased expectations that it will take more than a year for trading to return to normal.

It comes as Chancellor Rishi Sunak is set to announce changes to the furlough scheme, with reports suggesting employers will be asked to pay 20% of workers' wages as well as national insurance and pension contributions.

Make UK chief executive Stephen Phipson said: "There is no disguising the fact these figures make for awful reading with the impact on jobs and livelihoods across the UK.

"Industry and government must now leave no stone unturned to retain as many key skills as possible within the sector to ensure it is in a position to effectively recover when growth eventually returns, which at some point it will."

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He added: "The job retention scheme has been very effective in allowing employers to retain as many of their staff as possible, but industry accepts that it cannot continue indefinitely and will understand the plans to reduce the cost to the taxpayer and ask companies to make a greater contribution.

"In doing so, however, the chancellor should provide as much clarity and certainty for companies as possible whilst, at the same time, introducing an element of real flexibility into the scheme which allows for part-time work."

Next week from Monday to Thursday, Dermot Murnaghan will be hosting After the Pandemic: Our New World - a series of special live programmes about what our world will be like once the pandemic is over.

We'll be joined by some of the biggest names from the worlds of culture, politics, economics, science and technology. And you can take part too.

If you'd like to be in our virtual audience - from your own home - and put questions to the experts, email afterthepandemic@sky.uk

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