Business confidence in Coventry and Warwickshire has started to improve after the massive hit it took at the height of lockdown, according to a new survey.
The latest Quarterly Economic Survey by the Coventry and Warwickshire Chamber of Commerce, which acts as a barometer for the regional economy, showed that the outlook for the region was still way short of pre-Covid levels and that while business morale has shown a marked uplift it still hangs by a thread.
The survey, which is sponsored by Prime Accountants Group, is analysed by Warwickshire County Council and feeds into the national survey by the British Chambers of Commerce (BCC).
Warwickshire County Council’s analysis uses a similar score to the national Markits Purchasing Managers Index (PMI) where 50 is the balance and anything above means the majority feel positive and anything below means the reverse.
Business confidence in the second quarter of 2020 dropped to 38.3 in the service sector but rose to 54.4 in the latest survey. In manufacturing, it rose from 39.0 to 47.7.
There were improvements across the indicators of domestic sales, overseas sales, investment and cashflow, and employment in both the service sector and manufacturing. All were still, however, way short of the levels prior to the Coronavirus crisis and were all still below 50.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “Confidence has improved but only relatively speaking. We are comparing this quarter with Q2 when the economy was, largely, in hibernation.
“Businesses were, to a considerable degree, in a state of shock and it’s no surprise that almost every single economic indicator dropped to a record low.
“The third quarter has seen many areas of the economy beginning to tentatively reopen and that has generated something of a recovery in confidence but the overall economic outlook is still short of where we were prior to the crisis.
“It’s also very difficult to gauge right now if the confidence that businesses are experiencing is thanks to the huge levels of Government intervention.
“We must also acknowledge that many businesses remain unable to operate, especially those in the leisure and events sector which have been affected by the most recent Government restrictions.
“So, the final quarter of 2020 is going to remain challenging with the ongoing Coronavirus crisis coupled with the looming end to the Brexit transition.
“It’s vitally important that Government keeps its options open in terms of stimulating the economy and remains agile enough to support businesses as the crisis continues to evolve.
“As a Chamber, we will continue to feedback to Government where help is needed but will also continue to support the businesses across the patch with advice and guidance through this next phase of the crisis.”
Steve Harcourt, of Prime Accountants Group, said: “The UK was officially in a recession following two consecutive quarters of negative growth in 2020 Q1 and Q2. The overall effect of COVID-19 on the UK economy resulted in around a quarter of GDP in 2020 Q2 being erased.
“Economic indicators within the QES Q3 point to a recovery, buoyed by the release in business and economic activity, partly supported by pent-up consumer demand and growing confidence from the drop-off in COVID-19 cases.
“This, combined with the additional economic policies announced in July, such as Eat Out to Help Out and the temporary cut in VAT for the hospitality and leisure sector, helped boost spending.
“However, the ongoing Government support is going to lead to a budget deficit and ultimately some long-term fiscal tightening will be needed after the full recovery from this crisis.
“There is still significant uncertainty over the pace and path of the recovery, especially in light of the growing number of cases which have led to another round of limited national restrictions, as well as the behaviour of the virus in the winter, degree of economic scarring and the outcome of the UK-EU trade negotiations. This is shown in the QES results for the region, as the overall economic outlook in the short term is still pessimistic, both in the service and manufacturing sectors.”
Pictured: Louise Bennett with Steve Harcourt