One in 10 British businesses say that there is a high risk they will enter insolvency as a result of the coronavirus crisis, according to the Opinium-Cebr Business Distress Tracker.
The Centre for Economics and Business Research (CEBR), which conducted the survey, said this equates to more than half a million (591,000) businesses that have been “pushed to the brink”. The majority (51%) of businesses also state that there is at least a small risk that they will go insolvent due to the crisis – equating to nearly three million firms across the country.
Additionally, the tracker found that more than a quarter of a million businesses will not be able to survive if trading conditions remain as they are for another month.
As a result, CEBR said a second wave of infections and a subsequent lockdown could also “prove fatal” for the business community, with almost one million businesses not being able to survive three more months of the lockdown.
The survey also shed the first light on how quickly the economy can rebound after the crisis. Businesses on average said they will need six months to return production to pre-crisis levels. One in six firms will need at least a year to recover, and UK GDP not set to return to 2019 levels until 2022.
Additionally, during the first 30 days of the national lockdown, businesses’ profits were down on average 29%.
Pablo Shah, senior economist at CEBR, said: “The results of the Business Tracker provide the first glimpse of the deep and long-term scars that the coronavirus crisis is set to inflict upon the UK economy. More than a half a million businesses are at a high risk of insolvency, while more than 250,000 do not expect to survive another month of the lockdown.
“Even for those businesses that do survive, the recovery looks set to be slow, with one in six businesses needing at least a year to return to pre-crisis levels of production.”
He added: “These figures dash hopes of an immediate bounce-back once restrictions are lifted, and instead point to a prolonged period of subdued output that is set to last for a period of years, rather than months.”
The Tracker is based on a survey of 500 businesses across the country, representing a broad range of industries and business sizes.