Britain’s recovery ground to halt last month amid new coronavirus restrictions and a rise in infections, a regular survey and real-time data show.
Business sentiment deteriorated by the end of the month, with only 35 per cent of the 500 companies surveyed for Opinium’s business distress tracker describing trading conditions as good.
Four weeks earlier, at the end of the Eat Out to Help Out scheme, 39 per cent had felt positive. The share with a positive outlook for the next 12 months dropped from 52 per cent to 45 per cent.
The monthly business barometer survey came after local lockdowns were imposed in northern areas of England and a 10pm curfew was introduced in pubs and restaurants nationwide on September 24.
Rishi Sunak unveiled a jobs support scheme to help companies through a second wave of Covid-19, but the survey suggested that it may do little to protect employment. The insight agency’s survey, carried out after the furlough follow-on had been announced, showed “that the share of furloughed employees businesses plan to retain was not affected by the announcement”.
Companies expect to lay off 35 per cent of furloughed workers once the scheme is replaced in November. Under the new scheme, employers have to bring staff back for a third of their hours and must pay an additional third of the hours that are not worked. In return, the state will pay for a further third, up to £697.92 a month.
With unofficial government estimates that about 2.5 million people remain on furlough, the figures suggest that about 900,000 of them will be laid off in the next few months.
Profits in the hospitality sector were 42 per cent lower over the past month than they were before the pandemic. For the survey respondents as a whole, profitability was 21 per cent lower in September than before Covid-19.
The findings were supported by an analysis of real-time data by Pantheon Macroeconomics: Google searches including the word “restaurant” were 13.1 per cent lower in the second half of September than they were in the first two weeks of the month; searches including “pub”, “gym” or “cinema” were down by 7.1 per cent, 7.2 per cent and 12.3 per cent, respectively.