UK firms report heavy impact from November lockdown - BCC

LONDON (Reuters) - Many British businesses struggled during four weeks of lockdown in November, according to a major survey which bodes poorly for the economy as new restrictions to tackle a fresh surge in COVID cases kick in.

FILE PHOTO: A woman feeds birds on the bank of the river Thames with London's financial district seen in the background, amid the coronavirus disease (COVID-19) in London, Britain, November 25, 2020. REUTERS/Simon Dawson

Britain’s economy shrank by a record 25% during March and April of last year, the height of the first lockdown. Most economists believe the impact of November’s restrictions was much smaller as businesses were more used to working remotely.

However the British Chambers of Commerce said a survey of more than 6,000 companies conducted from Nov. 2-26 showed nearly half the firms reported a drop in sales, including businesses in sectors not directly affected by the lockdown.

On Monday Prime Minister Boris Johnson ordered tougher restrictions for England, and other parts of the United Kingdom are also under strict social distancing measures.

“The announcement of another major lockdown across all four nations of the UK will compound the gloom for many,” said BCC director general Adam Marshall, who criticised the government for offering an inadequate “drip feed” of support.

Finance minister Rishi Sunak announced 4.6 billion pounds ($6.3 billion) of extra grants on Tuesday, which the BCC said would not stop otherwise viable firms from going bust.

The new lockdown, which will last until at least the middle of next month, requires non-essential shops to close across England - a restriction which did not apply in November - as well as shutting most other business premises to the public.

Hospitality businesses were hit hardest in November, due to the closure of pubs and restaurants, except for takeaways, causing 79% of them to report a drop in sales.

But 53% of transport and distribution firms and 44% of marketing companies also reported a fall in sales as clients reined in non-urgent expenditure.

“Businesses not forced to close by the lockdown and restrictions are also feeling the effects of the cash-flow crisis further up the supply chain,” the BCC said.

The Bank of England estimates British gross domestic product fell by just over 1% during the final quarter of 2020. The first official estimate of GDP for November will come on Jan. 15.

($1 = 0.7352 pounds)

Reporting by David Milliken; Editing by William Schomberg