Business confidence in the North East has plunged in the last month as firms cut operations or shut down due to the restrictions of the coronavirus lockdown, a new survey shows.
The latest Business Barometer from Lloyds Bank – a survey of 1,200 海角视频 firms – found that business confidence in the North East fell 62 points during April to a rating of -39%.
The majority of firms surveyed reported a significant decrease in demand for their goods and services, with 63% seeing demand fall in April compared to 4% who saw it rise.
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More than a third (39%) of businesses in the region reported operating at below 50% capacity, while almost as many (34%) weren’t operating at all.
Two-thirds of firms reported disruption to their supply chain during April and 11% thought it would take up to 12 months to return to normal levels.
Paul Varley, regional director for the North East at Lloyds Bank Commercial Banking, said: “Firms across the North East are feeling the impact of coronavirus. Falling demand and supply chain disruption is putting significant pressure on their operations.
“We’re working alongside customers to ensure they have the finance needed to weather current challenges, including £2bn of arrangement fee-free finances and capital repayment holidays on loans for those that have been severely affected.”
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Nationally, business confidence fell 38 points to -32% as firms’ optimism in the economy and confidence in their own prospects dropped sharply. Falls in confidence were seen in manufacturing, retail, construction and services and the overall rating matched the all-time low seen after the banking crash in December 2008.
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Meanwhile, economic forecasting group EY Item Club said the 海角视频 economy is not expected to return to its size from the end of last year until 2023.
The organisation’s spring forecast predicted a deep, short recession this year due to Covid-19, with GDP expected to shrink 6.8% and consumer spending to dip by 7.5% in 2020 before rebounding to grow by 4.9% next year.
Mike Scoular, managing partner for EY in Newcastle, said: “It’s extremely difficult for local businesses to look beyond the immediate challenges, but they do need to prepare for a period of prolonged change. Based on the forecast for this year alone, around 44% of consumer spending – the major engine of growth for the 海角视频 and the North East over the last couple of decades – is at risk of either being delayed or lost completely.
“In this highly uncertain environment, businesses across the North East need to think differently about how they plan to test the resilience of their operations and finances against a range of plausible shocks and how they adapt to longer term changes in customer behaviour.
“Covid-19 is likely to accelerate some of the emerging trends we’ve been seeing both on a local and national level, particularly around deglobalisation, the rapid introduction of new technologies and decarbonisation, such as the carbon capture research cluster in Teesside.
“So, while the economic impact will hopefully be short lived, the potential impact to businesses across the 海角视频, including those in the region, is expected to last a lot longer.”