UK economic crisis: 11% of businesses in danger of collapse – bleak ONS warning

UK economic crisis: 11% of businesses in danger of collapse – bleak ONS warning

Damning figures released by the Office for National Statistics (ONS) revealed 10 percent of businesses admitted their risk of insolvency was “moderate”. A further one percent said the likelihood of going bankrupt was a “severe risk”. The data from more than 20,000 UK businesses, also found 41 percent of firms believe they only have enough cash reserves to continue trading for another six months.

Meanwhile, four percent said they were already on the brink of going under and had no finances in the bank.

Around four out of five businesses, 78 percent, were more upbeat about their prospects and said the threat of insolvency was either “low” or “no risk”.

The coronavirus crisis has plunged the UK into a recession and the economy suffered its biggest slump on record between April and June.

The economy shrank by 20.4 percent in the second quarter compared to the first three months of the year.

The ONS data for the two week period to August 9, found just under a quarter of businesses (23 percent) said turnover was down by 20 percent compared to the same time last tear.

Around a fifth of firms (17 percent) said turnover was down by between 20-50 percent, meanwhile 11 percent of firms said revenue had plunged by more than 50 percent.

Since the start of the pandemic, more than 40,000 jobs in the retail sector have been put under threat.

On Wednesday, Marks & Spencer became the latest firm to cut staff after announcing 7,000 job losses.

Other big names so announce cuts include the John Lewis Partnership, WH Smith, Boots, Dixons, and Debenhams.

The struggle for businesses is evident as around one in eight of the UK workforce remain on furlough.

Firms will have to start contributing to the scheme, as the Government will only contribute 70 percent of wages, with this reducing to 60 percent in October.

At the height of the pandemic more than nine million workers – around a third of the UK workforce was being subsidised by the Treasury.

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Vehicle data released by the Department for Transport found freight traffic had shot up to 90 percent of the level seen before the lockdown in February.

Chloe Gibbs of the ONS said: “Despite recent economic news, it is encouraging to see that four in five businesses say they are at no or low risk of going bust.

“New traffic data show that the number of car journeys is returning back to normal levels as people venture out to shops and travel to work.”

Published at Thu, 20 Aug 2020 12:53:00 +0000