How well has Sunak done? —my analysis of economic data during the pandemic
As we await the Spending Review I have put together this summary of my Rangewell analysis of economic data during the pandemic.
Read the report in full HERE.
Businesses were on course for a v-shaped recovery in the Summer but, unsurprisingly, further restrictions have had a negative effect. Sunak’s business support schemes have worked, so we could be heading for a wonky ‘w’ shaped recovery.
All industries saw a dramatic drop in GDP at the start of the pandemic. Some sectors struggled to return to their February levels, while others saw their output bounce back to their pre-March levels by June.
Sector-specific GDP is a good metric but is delayed. ONS’s turnover and profitability data are fortnightly and seem to be following the same trends as the UK monthly GDP estimates.
If you compare June’s and October’s drop in expected turnover, it had decreased from 65% in June to just 45% by the beginning of October.
As restrictions came into force throughout by the start of November, the percentage of businesses experiencing a decrease in turnover increased sharply. 50% of businesses experienced a lower turnover to what is normally expected for November.
The good news is that the Autumn lockdown was less abrasive, so the dip has not been as deep and it already looks like the recovery will be faster.
All of the UK increased online job adverts in November. Wales had the largest increase from 77% to 82%. This coincides with the end of the Welsh “firebreak”. The highest volume of job adverts compared with its 2019 average was in the East Midlands, at 89%.
One of the reasons we might see a sharper exit from these restrictions is because businesses are adapting. Online sales rising across all sectors when compared with the same time a year earlier and many people being able to continue to work.
The proportion of online sales increased across all sectors with food stores nearly doubling their online proportions from 5.4% in February to 10.4% in September.
This lockdown 60% of the UK workforce were at their normal place of work and firms. The Arts and Hospitality had the highest proportions of the workforce on furlough, while heavy industries such as Manufacturing and Construction had the lowest.
The success of the UK economy to bounce back is a great credit to Rishi Sunak. His business support packages have worked. The government-guaranteed Covid business support loan schemes have delivered £65.5bn of finance to 1.4 million UK businesses. The application success rate high — Bounce Back Loans has a 79% application success rate. 45% for Coronavirus Business Interruption Loan Scheme and 62% for the Coronavirus Large Business Interruption Loan Scheme.
Manufacturing, Construction and Hospitality have been the most active sectors for the loan schemes, with 36%, 42% and 34% respectively reserving a Government-guaranteed loan.
The Devolved Covid Small Business Grants have been popular within the Manufacturing, Construction, Retail, Hospitality and The Arts sectors, while the Devolved Sector-Specific Grants have been utilised by the Transport and Hospitality sectors throughout the UK.
Sunak’s Kickstart Job Scheme for young people has not been widely popular, only 2% of businesses have or will use the Scheme. The Construction industry has adopted KJS more than any other sector but only by 3% of Construction firms.
Job Retention Bonus has not been as successful as the Treasury might have hopped. The silver lining is that 80% of businesses have not or do not intend to use it as they do not have furloughed employees.
Sunak’s support schemes have worked, but it is becoming clear that these measures will need to continue for the foreseeable future as the recovery has not been even. Some sectors have been more affected than others.
Hospitality has barely been more than 20% below their February output. Healthcare, such as Dentists and Pharmacists, has flatlined 25% below the February standard.
Unfortunately, 14% of Hospitality firms say that their furloughed workers will be made redundant by the end of the year.
One month and ten days after Rishi Sunak was promoted to Chancellor, Boris Johnson told the country that people ‘must’ stay at home and certain businesses must close. The Chancellor has done a good job so far. His support packages have worked.
We are certainly not out of the woods yet. The nation can not afford for Downing Street to lose concentration with their ‘restart’ projects at this critical time of the recovery. Businesses need the Chancellor’s support for the feasible future to guarantee a wonky ‘w’ shaped recovery.