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Confidence returning as Upbeat budget gets restrictions begin to lift business backing Business leaders in Coventry and Warwickshire have given a broad welcome to the Chancellor’s budget as he announced initial support to help firms survive the COVID-19 crisis and then invest in an economy recovery. Chancellor Rishi Sunak delivered his budget in three parts, announcing further support measures for businesses and individuals before moving on to how he would fix the UK finances and concluding on how the government intended to build the future economy.
Coventry and Warwickshire businesses emerged from the first three months of the year feeling more confident than at any point over the past 12 months, according a new survey. However, the Coventry and Warwickshire Chamber of Commerce’s first Quarterly Economic Survey of 2021 showed that there are still many concerns around the economic recovery after the COVID-19 crisis hit firms hard across the region. The survey, which is delivered in partnership with Prime Accountants Group, is analysed by the economy & skills group at Warwickshire County Council. Its analysis uses a similar score to the national Markits Purchasing Managers Index (PMI) where 50 is the balance and anything above means the majority feel positive and anything below means the reverse.
There were further incentives on offer to take on apprentices, and for businesses to invest through a new “super-deduction” that reduced tax by 130 per cent of the cost over the next two years. The Chancellor also revealed that the business rates holiday would continue until June and that VAT for hospitality firms would remain at five per cent until September. He did reveal, however, that corporation tax would rise to 25 per cent in 2023. There were also announcements around investments in skills, digital development and a new levelling up fund for regions to apply for. Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The Chancellor has clearly heard the calls from our members in Coventry and Warwickshire and businesses up and down the country that more help was needed to get through the crisis and then to invest in the recovery and the future. “It was very upbeat speech, considering the health and economic crisis we have all faced over the past 12 months – one designed to give businesses confidence that they can survive and then grow.”
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But there were mixed responses when it came to other factors such as employment, investment and orders.
In both manufacturing and the service sector, the employment index dropped below 50, suggesting a potential rise in unemployment over the coming months. When it comes to investment and cashflow, manufacturing rose to 50.7 from 41.3 while the service sector fell from 45.3 to 43.3. All of the responses taken together created an overall economic outlook figure of 53.0 up from 51.5 in the final quarter of 2020.
Louise Bennett with Steve Harcourt (Prime Accountants Group)
Sean Rose, policy officer of the Coventry and Warwickshire Chamber of Commerce, said: “When you take into consideration that the first three months of 2021 saw our leisure, hospitality and events sector still closed along with non-essential retail, as well as the fact that the new trading relationship with the EU was just kicking in, these results paint a reasonably positive mood among our businesses.”
Small firms hardest hit by Brexit, says expert
The speech was watched by an online panel organised by the Coventry and Warwickshire Chamber of Commerce, supported by Prime Accountants Group. An extension to furlough until September and new restart grants were announced prior to the budget and were welcomed, while the Chancellor also revealed an extension on who qualified for support under the help for the self-employed. He also announced a new government-backed recovery loan scheme.
Of those firms surveyed in Coventry and Warwickshire, service sector confidence jumped to 80.1 compared to 67.9 at the end of 2020, while the manufacturing sector moved up to 71.1 from 71.0.
One of the leading international experts on UKEU trade has told an audience in Coventry and Warwickshire that smaller businesses are being hardest hit by a fall in trade following Brexit. Dan Dalton, a former MEP and now the CEO of the British Chamber of Commerce to the EU and Belgium, was speaking to businesses at an online event with the Coventry and Warwickshire Chamber of Commerce. He reflected on figures that showed exports to the EU had fallen by 40 per cent in January and that imports had dropped by 28 per cent, and urged businesses to keep highlighting their issues to Government. Dalton said: “When you dig deeper into the figures, the majority of the exports that are getting into the EU are from
bigger businesses – which means that trade from SMEs is virtually at a standstill. “We really don’t know yet how hard it is going to hit smaller businesses in the longer term but that is not a good sign. “Those figures could also be being skewed by stockpiling before the transition period came to an end and, also, the ongoing effect of Covid-19. However, when you look at trade in food – something that can’t be stockpiled – that has fallen dramatically too, so I’d suggest this could be a longterm trend. “And, because of Covid, we don’t yet know what the effect is going to be on services as people aren’t yet able to travel into Europe but, again, that is another issue we have got on the horizon. “The agreement that was signed between the UK and EU is binding but, written within it, there is the opportunity to build on the relationship over time. So, businesses should keep up the pressure and should let Government know
what problems they are facing so that they can take those into account if they return to the negotiating table with the EU. “In a sense, it’s a truly world class agreement between the EU and UK because it offers tariff free trade – but it’s the non-tariff barriers that are causing the headaches and the vast majority of those are here to stay because we are no longer in the Single Market or the Customs Union.” The event also heard from the Chamber’s former Brexit Club Chair David Burton; International Trade Director Ajay Desai; and David Hooper, of Hooper & Co, who has been delivering training to businesses on the new rules around trading with the EU. Hooper said: “There were many who thought that if we got an agreement with the EU everything would stay the same, but that’s simply not the case. “EU businesses were even less prepared for this than those in the UK and, sadly, they are just looking at new
suppliers within the Single Market and Customs Union now and companies in Coventry and Warwickshire are losing out. “There are some teething problems but there are some longer-term issues too. It’s currently taking three weeks to get freight into France – that was two to three days prior to Brexit. “I’ve had one customer tell me that it was quicker for their business to get goods sent to Saudi Arabia than it is to get them to Cork in Ireland. “There are businesses that just don’t understand much of the paperwork and the new rules around duties and VAT – and it has the potential to do real damage.” Desai said: “The volume of calls to the Chamber’s International Trade team has increased five times since the end of the transition. “We’ve got a strong team in place to help support businesses and, also, to ensure their issues are passed on in order to find a long-term solution.”
Chamber support is music to Debbie’s ears A Coventry business owner is ready to strike the right chord in 2021 after her business was put on hold for a year. Debbie Lynne launched a new company – Debbie Lynne Music – playing the violin at weddings and events, which builds on her passion for music that began when she was eight years old and has seen her play in a variety of orchestras in the UK and Europe. Debbie sought help to get the business underway from the Coventry and Warwickshire Chamber of Commerce start-
up team through the Coventry & Warwickshire Business Support Programme, which is part-funded by the European Regional Development Fund (ERDF). After a year on hold, she’s now raring to make Debbie Lynne Music a success in a year when the whole region will be celebrating culture. Debbie said: “I’d been made redundant and was then in a job I really didn’t like so at around Christmas 2019 I decided I would do something for myself.
“I thought I could really do something with music as it’s been a big part of my life since I was very young, having played in orchestras and string quartets through my career. “I decided that I would go down the route of playing solo at weddings and corporate events and, before COVID-19 hit, there had been some really good interest and quite a few bookings. “So, after a really tough year, I’m excited to be able to get out there and start playing again to help make the business a
success and I am hopeful that being City of Culture can help me to do that.” Through the Chamber, Debbie has been given help in writing business and marketing plans as well as attending training courses to help her with the basics of setting up her own venture. She was also assigned a mentor, Sarah Humphreys, by the Chamber and her support has certainly hit the right note.
www.cw-chamber.co.uk
