The UK’s mid-sized businesses – responsible for one in three UK jobs – are predicting a sharp recovery in their fortunes once COVID-19 vaccines roll out, according to new data published today.
Buoyed by news of vaccine trial successes, more than two thirds (68%) of the UK’s mid-tier businesses predict they will fully recover within just six months once a vaccine for COVID-19 is made available.
The fifth edition of the monthly Rethinking the Economy poll of 500 leaders of mid-sized businesses, found that 94% of mid-sized businesses believe that a vaccine will enable their business to recover within a year. 41% say they have already made significant changes to their 2021 business plans following the news of likely vaccines.
The news has given a boost to retail and hospitality businesses in particular. 71% of retailers and 69% of hospitality companies predict recovery within six months following the introduction of a vaccine. The service sector more broadly has been particularly boosted by the news, with 67% of financial services companies optimistic that a vaccine will help their businesses recover within six months.
Over half of businesses (53%) also reported feeling more optimistic about the UK’s economic recovery now compared with three months ago.
Despite the optimism around a potential vaccine, more than a third of businesses say that the current restrictions are their most immediate business concern. 38% of businesses say they have furloughed additional staff following the new restrictions and extension of the Job Retention Scheme, suggesting that businesses are still grappling with uncertainty in the run-up to Christmas.
Fears also remain regarding the reinstatement of a tougher regional COVID-19 tier system. 85% of businesses believe there will be a greater economic regional divide as a direct result of the tiering system, which sends a stark warning to Government ahead of the change to lockdown restrictions in early December.
The research shows that regional lockdowns have already caused a divide among businesses. 50% of companies in the North East, an area that has faced stricter restrictions for a longer period than many other regions, say they have not fully recovered from the first lockdown and think the impact of the current lockdown will be more severe.
The results also suggest businesses expect employees working from home to remain the norm for the foreseeable future, with a third (32%) planning to invest in technology to support more remote working in the next six months.
Commenting on the findings, Paul Eagland, managing partner of BDO, said: “It’s clear that news of a potentially successful vaccine has brought hope to many businesses up and down the country, but there is still a long road ahead.
“The most immediate concern for medium-sized businesses will be surviving a difficult winter on low cash reserves, coupled with uncertainty of Brexit and national and regional restrictions. While the Chancellor’s spending review shows a renewed commitment to the levelling up programme, the return to a regional tier system could pose tough challenges for businesses. The Government must ensure that any businesses disproportionately impacted by local lockdowns are given adequate support.
“The performance of medium-sized businesses will have a major impact on the overall recovery of the UK economy. It is crucial that the Government maintains timely communication and ensures that the right financial support and packages are available.”
Notes to editors
Medium-sized businesses are defined as businesses with revenue between £50-£350m. The survey was conducted by Censuswide on behalf of BDO in November 2020.
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Tom James / Francesca Bliss
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