• 43% of businesses saw lower profits than normal, according to the ONS September business survey (7th to 20th Sep)
• This rises to 61% in the accommodation and food services, with 23% saying profits were less than half they would expect at this time of year
• 19% of businesses intend to use increased homeworking in future, according to the ONS
• 34% said homeworking increased productivity
Laith Khalaf, financial analyst at investment platform AJ Bell comments on the latest ONS business survey:
“These latest figures lay bare the damaging and uneven impact of the COVID crisis on businesses across the country, with the hospitality and arts industries under particular strain.
“The figures relate to mid-September, when the economy was largely open. New social restrictions are likely to exacerbate the trends revealed by the figures, which explains why there’s such a battle going on in Westminster about the best path from here, given the increase in virus cases.
“Almost half of businesses (43%) saw their profits come in lower than they would expect at this time of year, according to the ONS data. The hospitality sector has been particularly badly hit, with 61% in accommodation and food services seeing lower profits, and almost a quarter of them saying profits had more than halved.
“It’s a similar picture in the arts and entertainment industry, where 28% of businesses said profits were down by more than 50% (see chart below). Across the board 10% of businesses said they were shut and didn’t intend opening in the next two weeks.
“The survey also shows that the homeworking revolution is here to stay, because not only is it cheaper for businesses, many are reporting that it also improves staff well-being and productivity.
“In the long term this should lead to higher profits for these businesses, but not all sectors can join the party. Understandably transport providers and accommodation and food services said they didn’t intend to use increased homeworking, for obvious reasons.
“The speed with which the transition is taking place will also create dislocation in property markets, likely driving activity in the private housing sector, while draining the commercial property sector of much needed income, as individuals and businesses review their new requirements.
“PMI data released earlier this week painted a more positive picture of the broad economy in September, suggesting that business activity continued to grow in the all important services sector. Indeed within the ONS survey, some businesses reported higher profits, and many reported their profits were where they should be, so it’s not a uniformly dismal picture. But ultimately no business in the economy is an island, and the risk is that as government financial support is withdrawn, the economic damage starts to spread.”
Source: ONS Coronavirus and the latest indicators for the UK economy and society
Question: In the last two weeks, how has the coronavirus (COVID-19) pandemic affected profits, compared with normal expectations for this time of year?
Businesses currently trading, broken down by industry, weighted by turnover, UK, 7 to 20 September 2020
