June 25, 2020 @ 13:20 by Richard Dawson
One of the most comprehensive surveys of the North East economy has revealed that the region is in the midst of a deep and damaging recession.
The Quarterly Economic Survey (QES) from independent business organisation, the North East England Chamber of Commerce, shows that economic activity has declined faster and further than at any time in the 2008/9 financial crisis.
Sales in the period of March to June 2020, herein referred to as the lockdown quarter, were down a record 54 per cent in the manufacturing sector and 63 per cent in services.
The massive impact was broadly similar in both the North East LEP and Tees Valley LEP areas, with both sales and orders falling by more than 60 per cent across the whole region.
Cashflow levels also declined at an unprecedented rate, down 29.7 and 52.7 per cent for manufacturing and services respectively.
The proportion of businesses operating at full capacity during the lockdown quarter was just 23 per cent, down from 30.2 per cent in Q1 2020.
Recruitment also predictably took a hit, with fewer than a quarter (22.1 per cent) of respondents looking to take on full-time staff, compared to 49.3 per cent this time last year.
Lesley Moody, president of the Chamber, said: “These results show the speed with which this crisis engulfed our economy.
“As a region we entered this crisis with above average levels of unemployment and economic inequality.
“While our survey shows workforce scores falling less dramatically, these are being supported by the Government’s job retention scheme.
“As we have pointed out to Government, downturns are more pronounced in regions such as ours and fall disproportionately on those with the least capacity to withstand them.
“We must therefore see a recovery built on principles of fairness, community, sustainability, and opportunity.
“The Chamber is ready to play a leading role in this; not just in campaigning for support but also in bringing our business community together to help one another, learn best practice and share new opportunities.
“It will be tough, but together we can build a stronger North East economy.”
The Chamber’s QES received 317 responses to additional questions aimed at identifying uptake in the Government’s business support measures and found that 261 firms had accessed at least one scheme.
65 per cent of all respondents said they were making use of the Coronavirus Job Retention Scheme (CJRS), whereas just 8.5 per cent had accessed the Coronavirus Business Interruption Loan Scheme (CBILS).
The Government’s Bounce Back loan had been accessed by 24 per cent of businesses, while 38.8 per cent said they had deferred VAT or other tax liabilities.
The Chamber survey was completed in partnership with Durham University Business School, who is affiliate sponsor of the QES.