The finance versus fatalities argument around COVID-19 is heating up, with nearly two-thirds (58%) of small business owners wanting to be back at work without restrictions by the end of May.
Buckworths, the UK’s only law firm working exclusively with start-ups and high growth businesses, surveyed over 500 UK SME owners and decision-makers to gauge attitudes towards the Government’s response to the coronavirus crisis and the economic impact of the ongoing lockdown.
With Boris Johnson expected to announce his exit strategy in the coming days, the need for urgent action to save the economy from free fall is clear. Over a quarter (27%) of SMEs don’t think the Government’s support scheme is enough to help them survive the impact of COVID-19,whilst nearly 20% of owners admitted their business could not survive longer than a month without a boost to their cash flow.
But whilst this figure for the whole of the country is staggering, the research showed that the economic impact of COVID-19 will be most severe in poorer regions of the UK. For example, 62% of SME owners in Northern Ireland said that their business could not stay open for another four weeks without further economic support, with 31% and 30% of SME owners in the West and East Midlands agreeing.
SMEs in more affluent parts of the UK were notably more optimistic about the future of their business – with only 14% of businesses in Greater London and just 13% in the South East expecting to close their doors by the end of May.
However, the financial hardship created by the lockdown is being compounded by a lack of help from landlords, with almost a fifth (19%) of British SMEs in the retail, catering and hospitality space having a rent holiday declined. In fact, only 14% of SME owners felt that their landlord was understanding of the impact of COVID-19 on their business and had granted them a rent holiday on their commercial lease.
With strict lockdown measures expected to last for at least another week, it is unsurprising that SME owners are not optimistic about how long it will take them to fully recover from the ongoing economic disruption. Over a third (35%) of SMEs in the financial sector believe it will take up to 2 years for them to recoup the financial losses caused by COVID-19, with decision-makers in the travel and transport sector (33%), IT and telecoms (23%) and retail (22%) expecting similar recovery times.
Michael Buckworth, Managing Director at Buckworths, says:
“The UK government has largely been on the front foot during the coronavirus crisis, announcing measures, such as the job retention scheme, almost before businesses had formulated their proposal.
“However, the government now seems to be on the back foot, reacting to pressure from business and the media to end the lockdown, and repeatedly failing to outline a viable exit strategy.
“Our research clearly shows that Britain’s smaller businesses don’t have the resources to survive and re-open if lockdown continues for much longer. With so many SMEs – particularly those in the retail and hospitality sectors – already saying that they are on life support, an extension would be the equivalent of pulling the plug. Not only would it devastate the UK economy and create a record spike in unemployment, but it would also lead to so many business closures that a return to normal pre-COVID-19 society would no longer be a feasible option.”
The research carried out by Buckworths forms part of the firm’s nationwide campaign: Rebooting British Businesses post COVID 19. The results of the survey will be analysed and dissected in Buckworths’ upcoming whitepaper.