The number of South West businesses reporting an increase in domestic sales dropped from 28% in the third quarter of 2019 to just 11% in the same period this year, a new study reveals.
Business West’s survey show that whilst sales growth across the region narrowly avoided dipping down to single digits in the three months to September 19, 2020, an easing of lockdown appears to have done little to spur domestic orders with growth down to 8.7% for the quarter.
Comparing this to the 20% figure recorded in the same period last year, the survey’s “bitterly disappointing” set of results represents an 11-point decline in just 12 months.
As well as providing evidence of an ailing domestic market amidst tough global trading conditions, the survey also demonstrates the mounting jobs crisis in the region, with less than 6% of businesses taking on staff compared to 15.7% in the same period last year.
Unsurprisingly, the sluggishness of the recovery from Covid-19 has resulted in a knock to business confidence in the region. Less than half (45%) of businesses surveyed stated that they were “optimistic” or “very optimistic” regarding the future.
Phil Smith, managing director of Business West - which represents 21,000 businesses in the South West including Chambers of Commerce members in Bristol, Bath, South Gloucestershire, Wiltshire and Gloucestershire - said: “Our findings clearly demonstrate that business conditions remain fragile in the face of uncertainty, with the prospect of a difficult winter to come.
“It is time to be direct. The economy will need more support, over and above the Chancellor’s welcome recent efforts. Ministers must stand ready to provide that support, and to strengthen measures to underpin business cash flow and jobs.
“The disappointing Test and Trace system must be improved to ensure as many businesses as possible can function through the winter and beyond.
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“A Brexit deal must be reached to avoid yet more disruption. And above all, businesses need confidence and calm, clear communication to successfully navigate a tricky period ahead.”
The hardest hit of the 300-plus respondents who answered the survey are in the retail, leisure and hospitality business – a sector of the economy which continues to suffer as a result of ongoing lockdown restrictions.
Jenny Bowen, of Bristol-based travel agent Sense Africa, said: “[The situation] is dire and business expansion will be very slow to get back to what its potential was.
“I have had to give back £122,000 to guests losing a profit margin of £100,000. I will lose around £20,000 this year. If people are not travelling by Easter, then I will have to close the business.”
Reporting similar losses is Jamie Goddard, the managing director of a Swindon live music business, who has been unable to work since the Covid-19 pandemic took hold.
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“All theatres have been shut, all wedding venues closed, no parties allowed, all festivals cancelled, no funding available,” he said. “For a long time, we have had no money, we have had no paid work. One hundred shows cancelled and I'm already down over £100,000 compared to last year between March and September.”
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The gloomy outlook for South West businesses is compounded by fears over a second spike and the end of the Brexit transition period according to Richard Clayton, managing director of Bath-based interior designers Clayton and Company who said: “Uncertainty on medium term effects of COVID is compounded by Brexit.
“Serious negative growth with Covid and Brexit will lead to lack of confidence for investment and a stagnating economy, high unemployment and high debt levels.”
Amongst the respondents there were a number of calls for the Government to reconsider introducing sector specific support packages targeted at retail, leisure and hospitality industries. Ms Bowen is one of them and she said: “I find it hard to understand why there are so few grants for tourism ventures that operate overseas.
“Local tourism is getting support for those owning property. Those of us who operate from home and who are sole directors fall through the cracks.”
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She called on the Government to “keep the furlough scheme going for tourism” - a call echoed by Lynn Plant of Mobex Exhibitions who said: “I think that the furlough and the grant/rates scheme was good, but it needs to continue, certainly for businesses like ours.”
She added: “The Government are saying its business as normal now and get back to work, but we still have a nil order book. We went from a full year (around £600,000) to nil overnight in March this year. There is no way we can see anything coming until the middle of next year and then we are not sure.”
Retailer Julie Boyles, of Linden Leisure in Winchcombe, made an appeal to the Government to boost customer confidence and get the tills ringing again.
She said: "Looking at high street shops, they have reduced opening hours, therefore there is less incentive for the public to go out shopping especially with restrictions of number of people allowed in etc.
“[Government must] start at the bottom encourage people to shop... reduce shops business rate, encourage local authorities to waive or reduce parking charges.”