Monday 29 June 2020.
Figures out this week from the Capital 500, London’s largest quarterly business survey, highlight the impact of the Covid-19 lockdown on the capital’s economy during the second quarter of 2020 – with the challenge for the hospitality sector especially clear.
London Chamber of Commerce and Industry (LCCI) data shows that 65% of the 500 London businesses polled (by Savanta ComRes* for LCCI regarding their Q2 2020 economic performance) reported reductions in their cashflow, as domestic and export revenue dried up.
The challenge was particularly acute for the hospitality sector – where 75% of firms reported a drop in cashflow.
A higher amount of hospitality businesses also reported a downturn in domestic sales (77%) and orders (73%) than any other sector of the London economy. For all businesses, 63% said domestic orders had declined from the previous quarter, while 66% said domestic sales were down.
Business confidence was also at its lowest amongst the hospitality sector, with 80% expecting economic conditions in London to worsen over the next year (67% amongst all business leaders), whilst 87% expect UK economic growth to worsen over the same time period (73% amongst all business leaders).
Richard Burge, Chief Executive of London Chamber of Commerce and Industry, said:
“With businesses forced to close their doors to stop the spread of Covid-19, it will surprise no-one to hear that the London economy largely took a swift and sizeable hit.
“The recovery will likely not be as swift. So, whilst business is grateful for the economic support package thus far, targeted sector intervention from the Government may well still be required later this year. The Q2 results particularly highlight Covid-19’s impact upon the capital’s renowned hospitality sector.”
The full report will be available at https://www.londonchamber.co.uk/policy-and-campaigning/quarterly-economic-survey/ on Wednesday (July 1).
Figures released by LCCI last week showed the scale of companies furloughing staff in London, and the ongoing threat of redundancies:
- 28% of London businesses have furloughed at least one member of their staff.
- A much higher share (64%) of larger companies (10+ staff) have furloughed at least one employee, compared to 24% of micro firms (1-9 staff).
- Among the 35% of business leaders of firms that have furloughed or plan to furlough employees, 23% of this group said that unless their business’s conditions improve by the end of the scheme* they will have to lay off all furloughed staff.
- 39% of those who have furloughed or plan to furlough employees said that unless conditions improve by the end of the scheme they will have to lay off some furloughed staff, and pay the wages of those who are retained themselves.
*Savanta ComRes interviewed 500 London business leaders online between 30 April and 2 June 2020. Data were weighted to be representative of all London business leaders by size and broad industry sector. Savanta ComRes is a member of the British Polling Council and abides by its rules.