Almost half of UK businesses are within six months of running out of cash, despite the lifeline provided by the government’s furlough scheme, according to the latest official snapshot of how firms are faring.
In its fortnightly survey on the economic impact of Covid-19, the Office for National Statistics found 44% of firms that responded said their reserves would last for less than six months.
Almost a quarter of businesses (24%) said they were not sure how long their cash reserves would last and 4% said they had no spare cash at all. About 27% said they had cash that would last beyond six months.
The ONS said 76% of firms had signed up for the Treasury’s wage subsidy scheme – up from 66% two weeks ago. Of those firms still trading, 72% said they were taking advantage of wage subsidies, rising to 91% for those that were closed.
After wage subsidies, the VAT payment deferral scheme was the second most popular support measure, with 59% taking the government up on its offer.
With the chancellor, Rishi Sunak, announcing this week the furlough scheme would be extended until the end of October, the ONS said there was a growing feeling it would take time for life to return to normal.
Official figures released this week showed the economy contracted by 2% in the first quarter of 2020, even though the lockdown only came into effect at the end of March. A much steeper decline is expected in the present quarter, and the Bank of England is projecting a 14% annual fall in in activity.
When the government put the economy into lockdown in March a third (33%) of those surveyed said they thought it would take six months or more for the country to bounce back to its pre-crisis state, but that figure has risen to 46%.
In more positive news, a survey of public opinion by the ONS found two months of Covid-19 lockdown have made Britain a kinder and more united country.
Although the public was becoming gloomier about an early return to life as normal, it thought there had been benefits from the two-month lockdown.
In its first attempt to assess how attitudes had changed, the ONS said before the crisis broke only 21% of people thought Britain was a united country, but this had risen to 57% in the latest survey.
The proportion of those who consider Britain a kind country has increased from 39% to 67%. The ONS said the sense that Britain was becoming kinder and more united was especially marked among older people.
Despite a sense that Britain was becoming kinder and more united, there was less confidence it would emerge from Covid-19 a more equal country. Only one in six adults (16%) thought the UK went into the crisis a “somewhat or very equal” country, while 22% said it would emerge from it as more equal. More than 80% of the public expect their financial situation to deteriorate (41%) or stay the same (42%) in the next year.
The ONS’s Hugh Stickland said: “It is interesting to see the growth in community spirit over the weeks ONS has carried out this survey. Now for the first time, we’ve asked people about their attitudes and expectations of a post-pandemic nation. In many cases, this is optimistic, especially among older people.”