Lockdown heralds 'bleak midwinter' for business

Business leaders have greeted the government decision for a new, month-long lockdown in England with an air of glum resignation.

David Sapsted

2 November 2020

Joining other major European economies with restrictions on movement and business activity, Prime Minister Boris Johnson said the latest lockdown was necessary to prevent health services being overwhelmed by a second wave of the Covid-19 pandemic.Dame Carolyn Fairbairn, who steps down this month as director-general of the Confederation of British Industry, said that while companies shared the government's aim of defeating the virus, the latest lockdown of all but essential businesses represented "the start of a bleak midwinter" for many firms."With the right support firms will do everything possible to minimise the damage," she added. "Across the country they have already shown how resilient they can be in the face of tighter restrictions. And thanks to huge efforts by businesses to make workplaces Covid secure, more of the economy can now stay open.“Extending furlough is a vital step. It will bring instant relief and protect jobs. It’s also a breakthrough to hear government support for rapid mass testing. Affordable fast tests are a game-changer for business, enabling more firms to stay open and operate normally. We must use this lockdown month to prepare and roll-out mass testing as a matter of national urgency."However,Dame Caroline said, some sectors might need more tailored support in the coming weeks and that it was clear government communication with businesses needed to improve."Firms can’t plan on the basis of speculation. Formal business involvement in lockdown planning is now urgently needed, matched by coordination with devolved nations to minimise confusion and build confidence.”And in her final speech to the CBI annual conference this week, Dame Carolyn will point out that young people have been among the hardest hit by the devastating economic impact of the pandemic."They face most risk of losing their job, find it hardest to move into new jobs, and are the most affected by long periods of unemployment," she will say.“They are also facing serious interruptions in their education and training. Seven in ten young people feel their life is on hold, while anxiety and depression are on the rise. Urgent action is needed to protect their futures and prevent a lost Covid generation.”She is also urging business and government to act at speed and with bold ambition to create an economic revival plan – not wait for the pandemic to pass.Reacting to new lockdown, Jonathan Geldart, director-general of the Institute of Directors, accepted that controlling the virus would be crucial for the economy in the long run. But he added: "Make no mistake, these measures will put great strain on an already fragile business community.“The decision to reinstate furlough is absolutely the right one, and the announcement should bring relief to many businesses. Directors will be eager for clarity on the employer contributions, as we are now returning to circumstances much like the start of the summer.“With the return of restrictions, gaps in government support must be sorted at long last. Small company directors who have gone without support throughout the crisis should be helped through local authority grants.“It's also now clear that the government made a mistake ending its suspension of wrongful trading rules. This gave directors much needed breathing space to protect businesses and jobs during the summer. To help to prevent a flood of insolvencies, it must be reinstated straight away."Adam Marshall, director-general of the British Chambers of Commerce, said it was an inescapable fact that the new restrictions represented a "devastating blow" to the business communities.“Business and market confidence have been hit hard by the unclear, stop-start approach taken by governments across the UK over the past eight months, with little end in sight. Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures or demand restrictions," he said.While he welcomed the month-long extension of the furlough scheme, he called on the government for clarity over the extent of the full financial support package for businesses facing hardship.James Brougham, senior economist at the manufacturers' organisation Make UK, added: "While the recently announced month-long extension to the Job Retention Scheme will put the brakes on the rate of job losses, manufacturers will experience a foreboding déjà vu as they face the exceptional operational challenges induced by another national lockdown.