Third lockdown puts UK on course for double-dip recession, says British Chambers of Commerce

Nearly half of businesses saw sales fall in final three months of 2020

England’s third national lockdown is set to tip the UK’s economy over the edge - pushing it into a double-dip recession in the first quarter after a “downbeat end to 2020”, according to a new report.

The review - conducted by the British Chambers of Commerce (BCC) - found that 43 per cent of all businesses saw sales fall in the final three months of last year, which increased to 79 per cent in the hospitality and catering industry.

The quarterly survey also revealed the battering customer-facing firms had taken under the November lockdown, with the latest restrictions projected to make matters much worse - especially considering they have no official end date. 

Of the 6,203 firms polled by BCC, just 26 per cent reported rising sales while 3 per cent said there was no change.

Suren Thiru, head of economics at the BCC, said: “These results indicate that economic activity was strikingly downbeat in the final quarter of 2020 as the reintroduction of tighter coronavirus restrictions weighed heavily on the key drivers of growth.”

She also said that the services sector “endured a particularly difficult quarter” and that “consumer-facing businesses most severely exposed to the renewed restrictions”. 

Ninety-four per cent of the businesses polled for the BCC survey were small, a sector likely to feel the impact of this new lockdown more than others. 

Speaking to The Independent on Tuesday night, the owner of an independent ice cream shop in Cranleigh, Surrey, said his decision to close after the national lockdown was announced was one of both a moral and legal obligation.

“Technically we’re allowed to be open for takeaway,” Mike Carter, co-founder of the family-run Moooh Ice Cream, said. “But we felt it was more important to protect the community and not encourage people to leave their homes to come and buy ice cream.”

Mr Carter said the decision to switch to a “Covid-compliant delivery service” only was not one his family had taken lightly, “because we’ll obviously still lose money… but ice cream isn’t essential and we’re nothing without our health”. 

The BCC survey did reveal some good news, with manufacturing enjoying an improvement in orders at the end of last year which saw the balance of firms reporting increased domestic sales increasing to -9 per cent, up from -15 per cent in the third quarter.

The balance of firms reporting increased export sales increased to -8 per cent from -26 per cent in the previous three months, though it was stated in the document this was largely down to a temporary boost from Brexit stockpiling ahead of the year-end deal deadline. 

It also found that cash flow - a key indicator of business health - in the services sector remained at levels not seen since the financial crisis, despite a slight improvement in the fourth quarter.

According to the BCC, 43 per cent of firms saw worsening cash flow with some 21 per cent reporting an improvement.

Ms Thiru, of BCC, finished her statement by saying there was “real optimism” for business due to the vaccine rollout but that, ultimately, “a new national lockdown means that a significant double-dip recession in the first quarter of this year is looking increasingly likely”.