Coronavirus: two-thirds of UK companies fully operational but demand low

Six per cent of firms surveyed are still closed but business activity remains minimal

Chancellor of the Exchequer Rishi Sunak has been urged to give greater support to struggling businesses. Reuters

Two-thirds of UK companies are completely operational and only six per cent are still closed, but many companies remain in a state of acute financial distress as coronavirus lockdown measures ease.

According to the Confederation of British Industry, which surveyed 752 respondents in late June and early July, there are hints that business is picking up again with manufacturers expecting output to grow by 15 per cent in the next three months.

While the drop in private activity has slowed, the CBI’s monthly growth indicator found that it still fell by 57 per cent.

Low demand remains a major concern with 68 per cent of those surveyed saying it remained an operational challenge, down 74 per cent from June.

Another survey by the CBI last month found that retail sales surged in July after non-essential stores reopened.

Alpesh Paleja, the CBI’s lead economist, said the government had begun addressing the growing economic legacies of the coronavirus pandemic, but that more needed to be done.

“With businesses gradually reopening, this month’s data seems to indicate a turning point for the economy. Yet activity is still falling sharply, particularly for those in consumer-facing sectors,” he said.

“It’s clear that many businesses remain in acute financial distress.

“More immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”

Challenges over the return to the office and the legacy of working from home remain. A one-metre social distancing rule – currently government policy so long as measures such as face masks are taken – allows firms to operate at 85 per cent capacity, compared to 72 per cent under a two-metre rule.

More than a quarter see half or less of their office space as essential and 65 per cent believe at least 20 per cent of their office space is non-essential.

Britain's lockdown has been slowly lifting since May, with the last major change on July 4 when hotels, pubs and restaurants were allowed to reopen.

However, on Friday Prime Minister Boris Johnson said he was postponing further easing, which would have helped some arts and entertainment venues, due to rising cases. More than 46,000 deaths have been officially attributed to Covid-19 since the crisis began.

The Bank of England is due to set out new quarterly forecasts on Thursday, as sectors of the economy recover at different rates from the unprecedented economic damage.