An overwhelming number of Midlands businesses predict a swift recovery once COVID-19 vaccines roll out, according to new data published today.
Following news of multiple vaccine trial successes, including Oxford University’s breakthrough in collaboration with AstraZeneca plc, a resounding 98 per cent of businesses in the region predict they will fully recover in less than a year. Data shows that more than half of Midlands businesses believe it will take less time to return to pre-COVID-19 levels – within just six months once a vaccine is made available.
The latest, and very optimistic BDO Rethinking the Economy survey of 500 mid-sized businesses, found that more than half of Midlands businesses say they plan to make significant changes to their 2021 business plans following the news of likely vaccines.
Nearly half of businesses also reported feeling more optimistic about the UK’s economic recovery compared with three months ago.
But, despite the optimism around a potential vaccine, 92 per cent of businesses in the Midlands believe the Government’s tiered system will lead to a greater economic divide. This comes as the Chancellor, Rishi Sunak, announced a £4 billion Levelling up Fund, as part of last week’s Spending Review. The investment will take a place-based approach and directly fund regional projects of up to £20 million based on assessing local impact. However, to date, the Government’s system for managing local economic policy is “dysfunctional”, according to academics at the University of Birmingham.
They have warned that the gap between the richest parts of the UK and the rest is still growing, commenting: “In the absence of change, there is zero chance of reversing the long-term trend that levelling up requires.”
Tim Foster, partner at BDO LLP in the Midlands, said: “There is little doubt that the news of a potential vaccine has gone a significant way to boosting the prospects of Midlands businesses.
“While the majority of business leaders in the region believe that a vaccine will help trigger business recovery, the fact still remains that a significant proportion of companies face stiff operational challenges. These include managing cashflow and international supply chains, as well as contending with the ongoing regional tiered lockdowns.”
He added: “The Government’s tiered approach to lockdowns has clearly intensified the levelling up debate in the regions, with 92% of mid-sized businesses in the Midlands believing that COVID-19 will further widen the UK’s north / south economic gap. The announcement of the new tiers from the Government last week supports this concern, with the majority of Midlands businesses facing the toughest restrictions in Tier three.
“Business owners have identified a need for infrastructure investment across the UK, with a focus on shovel-ready, high-impact projects that meet the specific needs of each region. Only time will tell if the £4 billion Levelling up Fund will help to appease those concerns and meet the needs of the region.”
The Rethinking the Economy survey also revealed that 18 per cent of businesses say that another national lockdown is one of the biggest threats to their business in 2021, with accessing additional finance topping the list (20 per cent). However, 36 per cent of Midlands businesses are reducing the number of staff on furlough and bringing them back into the business, suggesting a level of confidence in the region’s economic recovery.