Covid And The UK Economy

According to a study published by the Office of National Statistics the outlook for the UK economy as a result of Coronavirus is somewhat alarming. 44% of currently trading UK businesses reported a negative impact on their turnover compared with what is normally expected for this time of year.

• According to the indicator derived from the Bank of England’s Clearing House Automated Payment System (CHAPS) data, in the week to 25 February 2021, aggregate debit and credit card purchases decreased by 3 percentage points to 73% of their February 2020 average.
• According to initial results from Wave 25 of the Business Insights and Conditions Survey (BICS), 44% of currently trading UK businesses reported a negative impact on their turnover compared with what is normally expected for this time of year.
• According to the latest Opinions and Lifestyle Survey (week ending 28 February 2021), the proportion of working adults in Great Britain who travelled to work (either exclusively or in combination with working from home) in the last seven days has increased slightly by 3 percentage points when compared with the previous week to 49%.
• According to exactEarth, there was an average of 344 daily ship visits in the week ending 28 February 2021, an increase of 4% from the previous week but 8% lower than the same period a year ago.
• According to Springboard, in the week to 27 February 2021, daily retail footfall in all UK countries and regions continues to be substantially lower than its level in the equivalent period of 2020.
• According to Adzuna, in the week ending 26 February 2021, total online job adverts were at 86% of their level in the same week last year, an increase of 5 percentage points from two weeks ago.
• According to Companies House, in the week to 26 February 2021, there were 17,096 company incorporations in the UK, an 8% increase from 15,846 in the previous week and higher than the number of incorporations seen in the same week of 2019 and 2020.
• According to the Department for Transport (DfT), on Monday 1 March 2021 the volume of all motor vehicle traffic increased by 3 percentage points when compared with Monday last week, to 73% of the level seen on the first week in February 2020.

It would appear that significant numbers of businesses would appear to be insolvent and could be in subsequent need of closing down, for example only either via a creditors voluntary liquidation or compulsory liquidation.

However, there is business help available as a result of Covid-19 recovery schemes to attempt to enable viable businesses to be rescued.

UK spending on debit and credit cards

In the week to 25 February 2021, the CHAPS-based indicator of credit and debit card purchases in aggregate decreased 3 percentage points from the previous week to 73% of its February 2020 average.

This was primarily driven by a decrease in card spending on “staples”, which fell by 7 percentage points from a small peak the previous week around Valentine’s Day. “Delayable” spending also saw a decrease of 4 percentage points from the previous week. However, “social” spending increased slightly, and “work-related” spending was unchanged from the previous week.

In the latest week, card spending on “staples” was 105% of its February 2020 average. On the other hand, “delayable”, “social” and “work-related” purchases were 56%, 59% and 64% of levels seen in February 2020, respectively. All three consumption categories remain above the lowest levels seen during the spring 2020 lockdown.

Since the substantial fall in spending at the beginning of the year, following the Christmas period and introduction of national lockdowns, the aggregate CHAPS-based indicator of debit and credit card purchases has increased, broadly in line with the comparable period in 2020, albeit at a much lower level.

Companies are allocated to one of four categories based on their primary business:

• “staples” refers to companies that sell essential goods that households need to purchase, such as food and utilities
• “work-related” refers to companies providing public transport or selling petrol
• “delayable” refers to companies selling goods whose purchase could be delayed, such as clothing or furnishings
• “social” refers to spending on travel and eating out

Business impacts and insights: Covid And The UK Economy

The preliminary result of 19% of businesses’ workforce on furlough leave in mid February 2021 equates to approximately 6 million people. This number is based on multiplying the BICS-weighted furlough proportions by the Inter-Departmental Business Register (IDBR) total annual employment. This will not be consistent with employment estimates from Labour market statistics as these are based on different sources over different time periods but provides an indication. Additionally, the BICS proportion furloughed does not include the public sector, financial sector and parts of agriculture.

Across all UK industries:

• 72% of businesses had been trading for more than the last two weeks
• 1% of businesses had started trading within the last two weeks after a pause in trading
• 3% of businesses had paused trading but intend to restart in the next two weeks
• 21% of businesses had paused trading and do not intend to restart in the next two weeks
• 3% of businesses had permanently ceased trading

Social impact of the coronavirus

This section includes some provisional results from the Opinions and Lifestyle Survey (OPN) covering the period 24 February to 28 February 2021. The survey went out to 6,028 adults in Great Britain and had a response rate of 70%. Further information to help understand the impact of the coronavirus (COVID-19) pandemic on people, households and communities in Great Britain, will be available in Coronavirus and the social impacts on Great Britain published on 5 March 2021.

Travelling to work

In the week ending 28 February 2021, the proportion of working adults in Great Britain who in the last seven days:

• travelled to work (either exclusively or in combination with working from home) has increased slightly by 3 percentage points when compared with the previous week to 49%
• worked exclusively from home has decreased slightly by 3 percentage points from the previous week to 32%
• neither travelled to work nor worked from home remains unchanged from the previous week at 19%

Shopping

Of the 93% of adults that reported they had left home in the last seven days, the proportion that did so to shop for food and medicine remained similar to the previous week at 77%.

The proportion of these adults who shopped for things other than food and medicine in the last seven days remained unchanged compared with the previous week at 9%. Although there has been no change this week, there has been a small, gradual increase over the previous four weeks from 5% in the week ending 24 January 2021. The generally low level coincides with the ongoing lockdowns throughout the UK.

Footfall: Covid And The UK Economy

National retail footfall

National footfall figures are supplied by Springboard, a provider of data on customer activity. They measure the following for overall UK retail footfall, as well as by high street, retail park, and shopping centre categories:

• daily retail footfall as a percentage of its level on the same day of the equivalent week of the previous year; for example, Saturday 27 February 2021 is compared with Saturday 22 February 2020
• total weekly retail footfall as a percentage of its level in the equivalent week of the prior year; for example, footfall in Week 8 of 2021 is compared with its level in Week 8 of 2020
• the percentage change in weekly footfall compared with the previous week; for example, Week 8 of 2021 is compared with Week 7 of 2021

Springboard’s weekly data are defined over a seven-day period running from Sunday to Saturday; Week 8 of 2021 therefore refers to the period Sunday 21 to Saturday 27 February 2021.

According to Springboard, in the week ending Saturday 27 February 2021, overall UK retail footfall was at 43% of its level compared with the equivalent week of 2020. This is an increase of 5 percentage points compared with the value of the same index in the previous week.

In the same seven-day period footfall at retail parks was at 69% of its level compared with the equivalent week of 2020. This remains substantially higher than that for shopping centres and high streets, which were at 31% and 37% of the levels seen in the equivalent week of 2020, respectively.

Week-on-week changes in retail footfall between the weeks ending 20 and 27 February 2021 showed a continued increase from the previous week across all three types of retail locations. Overall footfall rose by 11% between these periods whilst footfall at UK high streets saw the largest weekly increase of 16%. Footfall increased by 6% at both retail parks and shopping centres.

Regional retail footfall

Regional footfall figures are also supplied by Springboard and show the volume of overall retail footfall compared with the same day of the equivalent week of the previous year, by UK region.

Continuing the trend observed since the beginning of 2021, in the week to 27 February 2021, daily retail footfall continues to be substantially lower than its level in the equivalent period of 2020. In particular, daily retail footfall was weakest in the East Midlands, Wales, Scotland and Northern Ireland when compared with the same week of 2020. In contrast, retail footfall was stronger in the West Midlands, the South East and the South West.

For example, on Saturday 27 February 2021, retail footfall in the East Midlands was at 33% of its level recorded on the Saturday of the equivalent week of 2020, whereas the corresponding figure for the West Midlands was 48%. Users should note that this comparison has been made using figures for Saturday as this is typically the busiest day of the week for retail locations.

Online job adverts: Covid And The UK Economy

These figures use job adverts provided by Adzuna, an online job search engine, and include experimental estimates of online job adverts by Adzuna category and by UK country and NUTS1 region. The number of job adverts over time is an indicator of the demand for labour. The Adzuna categories used do not correspond to Standard Industrial Classification (SIC) categories, so these values are not directly comparable with the Office for National Statistics (ONS) Vacancy Survey.

Data for the week ending 19 February 2021 were unavailable so have been imputed through linear interpolation. Data for the week ending 26 February 2021 are unaffected by this. Given the imputation in last week’s data, fortnightly comparisons are made in this week’s bulletin rather than weekly to ensure meaningful comparisons.

According to Adzuna, in the last two weeks, the proportion of total UK online job adverts compared with the same week last year increased by 5 percentage points to 86%. This represents the broad continuation of a trend of increasing weekly online job adverts, when compared with their level last year, since reaching a low of 34% in May 2020.

Excluding the “unknown” category, in the last two weeks, online job adverts increased in 25 of the 28 Adzuna categories when compared with their level in the same week last year. Online job adverts in the “catering and hospitality” and “education” categories saw an increase of 5 and 7 percentage points compared with two weeks ago to 28% and 75% of the level seen in the same week last year, respectively. The “wholesale and retail” and “healthcare and social care” categories remained broadly unchanged from two weeks ago.

The most notable rise was for “transport, logistics and warehouse” and “manufacturing” categories, which increased by 36 and 21 percentage points to 151% and 149% of their level seen in the same week of last year, respectively. The year-on-year increase for manufacturing reflects, in part, a subdued level of online job adverts at the start of 2020. The largest fall in the last two weeks came from “legal”, which decreased by 18 percentage points to 63% of the level seen in the same week last year.

According to Adzuna, in the last two weeks, the volume of online job adverts as a proportion of its level in the same week of last year increased across all UK countries and regions. The volume of online job adverts increased the most in Northern Ireland, followed by the North East and Wales, with increases of 16, 13 and 12 percentage points, respectively. Despite this, only three regions (Northern Ireland, the North East and East Midlands) have a higher proportion of online job adverts than that seen in the same week last year. Online job adverts in London remain the lowest, at 73% of the level seen in the same week last year.

Company incorporations and voluntary dissolution applications

Incorporations

According to Companies House data, in the week to Friday 26 February 2021, there were 17,096 company incorporations in the UK, an 8% increase from the 15,846 seen in the previous week. This is higher than the number of incorporations seen in the ninth week of both 2019 and 2020, when 13,965 and 14,034 companies were registered, respectively. It is also the highest number of company incorporations seen so far this year and continues the trend of higher incorporations since the second half of last year.

Voluntary dissolution applications

In the week to Friday 26 February 2021, there were 6,629 voluntary dissolution applications, a 9% increase from 6,087 recorded in the previous week and the highest level seen since the week ending Friday 7 February 2020 when there were also 6,629 recorded. This is also higher than the number of voluntary dissolution applications seen in the ninth weeks of 2019 and 2020, when there were 4,898 and 6,239, respectively. However, the large weekly increases in the last two weeks can be in-part attributed to a backlog of paper applications that were processed.

Weekly online food and drink basket: Covid And The UK Economy

The overall price of items in the online food and drink basket was unchanged between the week ending 28 February 2021 and the previous week, with seven categories providing positive contributions to the overall price movement, six providing negative contributions

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