High street re-opening provides lifeline for retailers as insolvency risks halve
The Opinium-Cebr Business Distress Tracker checks the pulse of the UK business community on a fortnightly basis, as firms across the country grapple with the unprecedented challenges brought about by the coronavirus crisis. The Tracker is based on a survey of 500 business across the country, representing a broad range of industries and business sizes.
As the economy continues on its transition towards a “new normal”, there have been some tentative improvements in the Business Distress Tracker. The number of businesses that state they are safe from entering insolvency has risen by 235,000 over the past two weeks, taking the total share to nearly two-thirds (67%). This compares to just 41% in mid to late April.
Compared to other sectors, retail remains in a highly distressed state. However, news of non-essential shops re-opening this week has provided a lifeline to thousands that have been pushed to the brink of collapse during the lockdown. The share of retailers at a high or moderate risk of entering insolvency as a result of the coronavirus pandemic has fallen from 40% to 18% over the past two weeks.
While the immediate pressure has eased for some businesses, the long-term damage continues to accumulate. Businesses on average say they will need 34 weeks after restrictions are lifted to return to full production. This compares to 25 weeks in the first wave of the Business Distress Tracker in mid-late April.
Firms have gradually begun to wind down the emergency employment measures taken during the height of the crisis. An average of 25% of employees are working reduced hours as a result of the coronavirus outbreak – down from 29% two weeks previously.
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