The Impact of Covid-19 on Businesses
Covid-19 has brought an unprecedented impact on businesses worldwide. Governments around the world are contemplating how to get their country’s economy up & running again.
As per the mid-2020 report of the United Nations World Economic Situation and Prospects (WESP), the global economy will contract by 3.2% this year. This contraction is because of both, the direct and indirect impact of the Covid-19 pandemic on the global economy.
The mid-2020 WESP report states that over the next two years, the global economy is likely to lose nearly $8.5 trillion in output. This in-effect will wipe out the gains that the global economy made during the last four years. Such a sharp contraction hasn’t been seen since the Great Depression of the 1930s.
What did European Industries have to Endure Because of Covid-19?
Europe has a significant presence in global food products, motor vehicles, basic metals, and fabricated metals, machinery, and equipment industry. The food products market of EU28 added nearly 117 billion by 2018, when compared to the food production volume in 2008.
There is also considerable manufacturing of machinery and equipment in Europe, with the UK and Germany leading the European manufacturing industry. Covid-19 has brought many challenges to European industries as they are battling a COVID-induced recession now.
The factories have been shut down and there has been a constant shortage of raw materials because of Covid-19. The leading industrial powerhouses like the UK, Spain, and Italy have been highly affected by the pandemic. Many of Europe’s top companies such as Italy’s Ferrari S.p.A, the UK-based Jaguar Land Rover Automotive PLC, and many others had to suspend production at their manufacturing facilities.
Effect of Covid-19 on UK-based Businesses
A survey report found that more than half a million (591,000) UK businesses have been facing the brunt because of Covid-19. They have been pushed to the brink of closure with 10% of survey respondents reporting that there is a very high chance for them to enter insolvency. 51% of the survey respondents said that they are facing high risk and may enter insolvency.
On the other hand, 15% of surveyed businesses reported that there is a moderate chance of them becoming insolvent. 26% reported that there is a small chance for them to enter the insolvency. This amounts to 2.9 million UK-based businesses suffering the consequences of Covid-19.
The statistics uncovered by the Opinium-Cebr Business Distress Tracker presents a grim picture. Millions of businesses are facing a risk of closure if the economic situation does not normalize. The businesses that survive the first wave of infections, won’t be able to survive the economic onslaught brought by the second wave of COVID infections.
All UK businesses saw a considerable decrease in profits during the first month on national lockdown. The survey report mentioned that the average business profits were down by 29%. It is far worse for the businesses with 1-9 employees as they had to endure a 35% drop in their profits during the first month of national lockdown.
The Power of Adaptation: UK-based Businesses Changing Tracks to Tackle Financial Impact of Covid-19
Many of the UK businesses showed tremendous grit and determination in the face of challenges presented by Covid-19. 58 Gin, a popular boutique liquor brand, based in London, started producing a large-batch of hand sanitizer. They didn’t have many options as their market for hand-crafted gin vanished instantly with the country under lockdown.
58 Gin is not the only UK-based company that changed the track to battle Covid-19. Dyson, a Vacuum manufacturer started making ventilators for the UK government. They took an order from the UK government to manufacture 10,000 ventilators. Unfortunately, the order for 10,000 ventilators didn’t materialize as the UK government retracted from their commitment later on.
Royal Mint started manufacturing plastic visors for healthcare staff in the United Kingdom.
Honeywell, started manufacturing face-masks and named them Honeywell SuperOne face masks. They received an order of 70 million locally produced masks (by the UK government), which will be distributed to the NHS frontline staff and social care workers in the UK.
3D Folkes, a 3D printing company known for its advanced manufacturing techniques, shifted to producing parts for medical visors. They had to make this move after the Sheffield-based facility ceased production.
Skyrora a private Scottish Space Company started producing hand sanitizers and manufacturing 3D printed face visors for the NHS in partnership with National Physical Laboratory and Makerspace Paisley.
We certainly have more difficult times ahead of us, however, we need to try and look out for positives. The current business situation is slowly picking up in the United Kingdom and in some parts of Europe.
June’s retail sales and business activity raised hopes for faster recovery of the economy as it posted the strongest monthly growth of the last five years.
In comparison to retail sales in the month of may, retail sales rose by 13.9% in June. The consumer demand returned pretty close to the pre-pandemic levels. IHS Markit and the Chartered Institute of Procurement and Supply reported that Britain’s business activity started growing in July.
Those businesses who survived are starting to slowly get back to work and opening up again. At The Growth Hustlers we have also noticed a sudden uptick in businesses reaching out to us for Growth Marketing activities.
If you want to have a chat about Growth, please get in touch HERE
May Growth Be With You!