UK firms not seeing 'V'-shaped recovery - British Chambers of Commerce

LONDON (Reuters) - Many more British companies reported a fall in sales over the past three months than experienced an upswing, despite the lifting of lockdown restrictions for most parts of the economy, the British Chambers of Commerce (BCC) said on Thursday.

FILE PHOTO: The City of London financial district is seen during early morning mist from Greenwich Park in London, Britain, January 22, 2017. REUTERS/Hannah McKay

“Economic conditions remained exceptionally weak in the third quarter,” BCC economist Suren Thiru said.

The BCC’s quarterly economic survey - the largest of its kind in Britain - showed that 46% of firms surveyed reported that sales had fallen over the quarter, compared with 73% who reported a decline in the second quarter.

Just 27% of the 6,410 businesses surveyed between Aug. 24 and Sept. 14 reported higher sales than three months earlier.

The hospitality and catering sectors - which still face significant COVID restrictions on the size of events - were the most likely to report a further fall in sales.

“While the declines in indicators of activity slowed as the UK economy gradually reopened, they remain well short of pre-pandemic levels with little sign of a swift ‘V’-shaped recovery,” Thiru said.

Britain’s economy shrank by an historic 20% in the second quarter of 2020 after output collapsed in April, and the most recent official data show output in July was 11% below last year’s level.

Bank of England chief economist Andy Haldane estimated on Wednesday that output at the end of September was just 3%-4% below pre-crisis levels, and said those who took a less upbeat view risked undermining the recovery.

Some 41% of businesses in the BCC survey expected sales to improve over the next 12 months, compared with 35% who expected a decline.

However the BCC said rising coronavirus cases and more widespread local lockdowns since the survey concluded raised the danger that recent gains would go into reverse.

“Economic scarring already caused by the pandemic (is) starting to crystallise,” Thiru said.

Reporting by David Milliken; editing by Stephen Addison