COVID-19: Three in 10 business leaders don't think 'firms will survive a year'

Abigail Fenton
·Writer
·2 min read
Nearly a third of business leaders expect their company to go under within a year, according to a survey. Photo: LYCS Architecture/Unsplash
Nearly a third of business leaders expect their company to go under within a year, according to a survey. Photo: LYCS Architecture/Unsplash

Three in 10 business leaders in the UK fear their firm will collapse within the next year, according to a study.

About 30% of decision-makers within UK organisations told KnowYourMoney they do not expect their business to survive the next 12 months.

More than two fifths (45%) of businesses are likely to make redundancies in the year ahead, despite the ghovernment’s new Job Support Scheme, the survey of 534 found.

Meanwhile, almost half (46%) plan to reduce the amount they are spending on office space next year. This figure rises to six in 10 (61%) among large businesses with over 250 employees.

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The research also showed nearly two in three (38%) companies have taken on debt in 2020 without a clear plan of how and when it will be repaid.

Elsewhere, over two in three (42%) leaders said their business’ running costs has increased this year, while nearly half (46%) have seen demand for the product or service they offer decline.

Just 12% of decision-makers feel they could confidently predict their company’s turnover in 2021.

“The research exposes the brutal reality UK businesses are facing right now. Cost cutting is the order of the day for many, and financial planning has become difficult. The result is that many companies are fearing the worst for 2021,” said Nic Redfern, finance director at KnowYourMoney.

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“But remaining positive and proactive is extremely important in the current climate. While the ongoing challenges posed by the pandemic can make business leaders feel out of control, they must remember that there are still steps that can be taken to safeguard their futures.

He added: “The government has introduced a wide range of financial support schemes, and so long as a sound strategy is in place for what must be borrowed and how it can be repaid, there is still good reason to believe that this storm can be weathered.”

But, it would seem leaders disagree, as earlier this month, the British Chambers of Commerce (BCC), which represents over 75,000 businesses in the UK, called on prime minister Boris Johnson to provide more financial support to firms hit by local lockdowns.

Meanwhile, business confidence in the UK dropped for the first time in five months, during October, according to data from Lloyds Bank.

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