Greater Manchester Chamber’s first business survey for 2021 shows that businesses are suffering from the dual impact of Covid-19 and Brexit. Businesses are scaling down trade with EU because of the complexity associated with the UK-EU trade agreement.
The third national lockdown and uncertainty over when restrictions will be eased have contributed to a further decrease in demand, according to the COVID-19 and Brexit Impact Tracker survey conducted between 18th January and 1st February by Greater Manchester Chamber of Commerce. The Chamber’s previous survey, the Economic Survey for the fourth quarter of 2020 showed that demand had weakened to levels similar to those recorded in June 2020.
The latest survey results show that sales to both domestic and overseas customers have weakened considerably since December and are now at their lowest levels since at the peak of the coronavirus crisis.
Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said: “The third national lockdown that the UK is under and anxiety around newer strains which may require a prolonged lockdown will stifle both the supply and demand sides of the economy. It is almost 11 months since the first lockdown was imposed to address the public health crisis. Over that time, many businesses have scaled down and reduced workforce. Some have shut down permanently. The hospitality sector should have had its busiest season in the year. Instead, hospitality businesses have faced a major loss of sales and revenue. This is certain to prolong the recovery of city and town centres.”
On Brexit, the survey sought to understand the extent to which businesses found it easy or difficult to adapt to changes in trading goods and/or services under the terms of the new UK-EU trade agreement. Three-fourths of businesses that are currently trading with EU markets reported serious difficulties in preparing for the new rules. Of these, 15% are preparing to scale down EU trade because they find the new procedures too complex or costly to comply with.
Subrahmaniam added “It is now clear the trade deal secured in the eleventh hour is not the silver bullet it was touted to be. The devil is in the detail and compliance is not easy. Indeed, commonly cited concerns for scaling back EU trade included increased paperwork and administration costs, border delays and confusion about what rules to follow. Over half of survey respondents have taken on more debt compared to a year ago. A quarter of businesses have cash reserves to see them through for less than three months. That being the case, many businesses do not have the firepower to invest in Brexit preparation. It is imperative that the UK government does not rush into introducing full customs checks on imports in July. The timescales need to change, and additional support should be made available for businesses who are battling to adapt to new trading conditions. Without flexibility and support, there is likely to be further damage and the path to recovery will remain long and thorny.”