Almost half (49%) of mid-sized businesses say they will struggle to continue staying open if strict lockdown restrictions continue for another two months, a new report found, noting that such companies are “a critical part of any post-pandemic recovery.”
This comes as the government confirmed last week that England’s current lockdown will persist for at least another five weeks. Prime minister Boris Johnson promised to set out a fuller plan for unlocking the economy towards the end of February.
While ministers had suggested restrictions could remain in place until March, the confirmation is a blow for the economy. Non-essential retail is not expected to reopen until at least April while pubs and restaurants could be shut until May.
If the current lockdown lasts a further three months into April, 82% of mid-sized businesses said they would be at serious risk, according to accountancy and business advisory firm BDO’s report, which shows lockdown is taking its toll on medium-sized businesses.
Medium-sized businesses across the UK generate £1.4tn ($1.9tn) in revenues each year and provide one in four jobs, according to BDO’s analysis.
The report also found that medium-sized companies in the UK have taken on an average of £8m ($10.9m) in extra debt as a result of COVID-19 and nearly half (45%) are unsure if they will be able to pay additional debt back under current funding arrangements.
Almost a third (31%) believe the government should extend repayment terms on COVID-19 loans.
If restrictions are loosened ahead of spring, though, such businesses feel much more optimistic about their longer-term prospects: BDO’s research found that 87% believe that they will be able to increase trade and return to pre-COVID-19 revenues within three years.
Similarly, 87% are confident the government will provide enough support to businesses over the next 12 months.
Ed Dwan, partner and Head of BDO in the North West, noted that “the government has had to walk an incredibly difficult tightrope between protecting the UK’s businesses and shielding our health services throughout the course of this pandemic” but added “it is critical that in the upcoming budget we see policies that help support mid-market businesses.”
“History tells us that the rate of recovery of this market segment will play an important role in the overall economic recovery of the UK. For most, the already rapid roll-out of the vaccine cannot come soon enough,” he added.
A survey published in October last year showed 43% of medium sized enterprises did not expect to be in business beyond a year.
The research by law firm Fladgate said its survey of 500 SMEs paints a “concerning outlook” for the backbone of the UK economy.
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