More than half of small and medium-sized manufacturers in the UK have taken on debt to cope with the financial impact of the Covid-19 pandemic.
The Manufacturing Growth Programme (MGP), a small advisory business for small industrial companies, found that 54% of the UK’s smaller manufacturers have taken out a loan since the start of the pandemic as less demand and greater disruption took their toll on finances.
Six in 10 firms surveyed said they had seen orders fall while supplier times had lengthened.
MGP warned that the number of businesses taking on debt will impact their ability to recover and grow once the pandemic is over, as a portion of their earnings will be used to pay off debt instead of investing in growth.
Martin Coats, MGP’s managing director, said: “The results raise important questions about resilience… particularly given the uncertainties in the economy.
“Everyone was aware of the drop in orders due to the national lockdown and global issues, but what hasn’t been so well documented is the production problems some companies are facing and how disruption is causing major issues with pricing, costs and delivery performance.”
Mr Coats called on the government to provide targeted financial support for manufacturing and supply chain firms to enable a strong economic recovery.
Last week, business groups and the Labour party raised significant concerns over the lack of support for businesses in the supply chain that will undoubtedly be impacted significantly by their customers being forced to close under tighter restrictions.