United Kingdom / Coronavirus Insights
COVID-19: UK Industry Fast Facts

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by IBISWorld
Jul 07 2020

IBISWorld presents a collection of fast facts that outline how the spread of COVID-19 (coronavirus) has affected the different sectors of the UK economy.

 

  • Farming leaders and unions have expressed concerns about labour shortages, with the Country Land and Business Association estimating a shortage of 80,000 workers as the industry approaches peak season. Despite industry recruitment campaigns, including the government’s Pick for Britain portal, industry representatives have suggested that farmers still need up to 40,000 British residents to harvest fruit and vegetables.
  • Crop farming industries are expected to be negatively affected by reducing prices of global crops. Soya, rapeseed and wheat have already fallen in price.
  • Sales by liquid milk processors serving food service or wholesale markets are reported to have dropped between 50% and 60%.
  • Dairy farmers that have lost more than 25% of their income over April and May due to the coronavirus are able to access up to £10,000 in funding to help overcome the impact of the outbreak.
  • The outbreak has caused a severe demand shock for British fishers, as a result of plunging demand from export markets and domestic restaurants.
  • Many farmers are hopeful that the coronavirus outbreak will highlight the importance of domestic food supply, which could shape the government’s long-term policy approach after leaving the EU’s Common Agricultural Policy.
  • A ‘bounce back’ plan of trade measures for the agriculture, food and drink industry has been announced to help support businesses that have been affected by the coronavirus.

 

  • The coronavirus spread has caused the price of oil to fall as demand has decreased. Travel bans and weaker production have decreased demand; this had led to lower oil prices, negatively affecting the mining sector. Mining operators may also have to lay off some workers or send workers home in order to limit the spread of the virus.
  • The International Energy Agency states that global oil demand is expected to decline in 2020 as the impact of COVID-19 spreads around the world, constricting travel and broader economic activity.
  • Oil & Gas UK anticipates that 30,000 direct and indirect jobs could be lost as a result of the pandemic. On 28 April 2020 it also reported that all UK exploration and production companies were reporting a worse or significantly worse outlook for 2020, compared with the beginning of the year. Drilling activity could drop to record low levels, falling by up to 50% compared with 2019 levels.
  • OPEC forecasts that, despite gradual global economic recovery, demand for fuel will remain under pressure during the second half of the year due to the ongoing economic fallout. The organisation projects that consumption will slump by 9% over 2020. This would negatively affect the mining sector.

 

  • Coronavirus and the associated lockdown has resulted in a 20% reduction in demand for electricity in Great Britain on average. National Grid has estimated the cost of balancing the system to be £826.3 million between May and August 2020. This includes significant costs incurred in the form of payments to wind farms to stop generating electricity to avoid overloading the electricity grid.
  • Based on data published by the Office for National Statistics, a report by Catax estimates that total business investment in the utilities sector fell by 9% in the first quarter of 2020, from £4.3 billion in Q1 2019 to £3.9 billion. This is due to concern of a potential rise in future bad debt caused by the coronavirus outbreak.
  • The slowdown in electricity demand helped renewables overtake fossil fuels as the main source of electricity in Great Britain so far in 2020, according to Carbon Brief. Great Britain recorded 67 days, 22 hours and 55 minutes without burning coal to generate electricity between April and June 2020. This represents the longest coal-free stretch in almost 140 years.
  • According to research from Comparethemarket.com, a surge in usage of household appliances and electronics during lockdown means utility bills could rise by £32.31 per month.
  • A considerable reduction in allowance demand, caused by a significant decline in industrial activity due to lockdown measures, spurred a reduction in carbon prices in the EU Emissions Trading Scheme to €15 per tonne in March 2020. However, allowances have now recovered, even climbing above pre-lockdown levels to reach €27 at the end of June.

 

  • 12% of construction firms surveyed in the ONS Business Impact of COVID-19 Survey stated that they had temporarily closed or paused trading between the 1 June and 14 June. This is down from a peak of 29.1% of firms between 23 March and 5 April.
  • The IHS Markit UK Construction PMI increased to 55.3 in June 2020, from 28.9 in May. This follows three months of significant decline, and represents a sharp turnaround in the performance of the sector, aided by a phased restart of on-site work.
  • Building site closures are expected cause the United Kingdom to miss out on key housing targets. According to Savills, lockdown measures have bought work on 220,000 new homes to a standstill, undermining the government’s target of 300,000 homes built a year by 2025.
  • Construction output is expected to fall by 25% in 2020 in a best-case scenario forecast by the Construction Products Association.
  • In May 2020, the government published a written ministerial statement on planning and construction working hours. This statement expects local planning authorities to approve requests to temporarily extend construction working hours until 9pm from Monday to Saturday to ensure safe working in line with social distancing guidelines.

 

  • Major aerospace manufacturer Rolls Royce has announced that it is to cut 9,000 jobs as a result of the coronavirus. UK supercar maker McLaren also plans to cut more than a quarter of its 4,000-strong workforce.
  • The Confederation of British Industry’s measure of industrial output fell to -57 for the three months through June 2020, the lowest level of output since the survey started in July 1975. The steepest falls in production came in the automotive, mechanical engineering and metals sectors.
  • The IHS Markit UK Manufacturing PMI rose to 50.1 in June 2020, from 40.7 in the previous month, pointing towards a stabilisation in operating conditions in the sector.
  • Every major carmaker in the UK suspended or cut production during the height of the coronavirus outbreak. This includes Vauxhall owner Peugeot, Nissan, Honda, BMW and Toyota. The Society of Motor Manufacturers and Traders estimates that this will cause an 18% drop in UK car production in 2020 compared with 2019.
  • According to the SMMT, new car registrations were down 34.9% in June 2020 compared with June 2019. Additionally, year-to-date registrations are down 48.5% compared with 2019, with the number of cars joining the road in the first six months of the year down to its lowest level since 1971.
  • According to the ONS Business Impact of COVID-19 Survey, 2.6% of firms in the manufacturing sector had temporarily closed or paused trading between 1 June and 14 June. This is compared with 22.7% of firms between 23 March and 5 April.

 

  • Demand for food and grocery supply wholesalers has increased, particularly at the start of the lockdown; however, this boost had not been enough to outweigh the drop in spending elsewhere. Some UK food wholesalers, such as Bidfood, which is one of the largest fresh and chilled food suppliers to the catering industry, have set up operations to sell directly to consumers as revenue from restaurant and catering customers has plummeted.
  • Following the easing of restrictions, outdoor markets and car showrooms in England were allowed to reopen from 1 June, while non-essential retailers were allowed to reopen in England from 15 June. This is expected to provide some boost for the wholesale trade sector. Car dealerships in Wales and Scotland were allowed to reopen at the end of June.
  • The Society of Motor Manufacturers and Traders (SMMT) states that new car registrations in June were 145,377, down 34.9% compared with the prior year. However, this marks a big improvement from the 89% drop recorded in May.
  • According to the SMMT, car registration reached 653,502 in the first six months of 2020, representing a fall of 48.5% on the number of cars registered over the same period in 2019 (1,269,245).
  • The easing of restrictions from 13 May will aid wholesalers as many manufacturers restart operations. Carmakers Bentley and Toyota are starting up again, with workers returning to sites.
  • In the coming months, car dealers are preparing to cut tens of thousands of jobs across the United Kingdom in the best-case scenario and 150,000 jobs in the worst case, according to forecasts from executives.
  • According to McKinsey, 1.7 million jobs in the retail and wholesale sector are potentially at risk due to the coronavirus outbreak.

 

  • High-street footfall on 4 July was 48% below the same shopping day last year, although this is likely due to the reopening of hair salons, restaurants, pubs and bars diverting consumer attention away from retailers.
  • Fast-fashion brand Boohoo has come under fire for illicit labour conditions with its primary supplier in Leicester paying workers just £3.50 an hour, far below the national minimum wage. The brand also faces accusations of fuelling the spread of the virus after claims that Leicester factories were pressured to increase production during lockdown without implementing social distancing measures.
  • Retailers have started to announce the impact of the pandemic on their finances. Association of British Foods, parent of the UK’s largest clothing retailer, Primark, expects adjusted operating profit for the discount brand to be in the range £300 million to £350 million for the 2020-21 compared with £913 million reported for 2018-19, and expected £1 billion for 2019-20. Meanwhile, takeaway chain Pret-a-Manger has announced plans to cut 1,000 or more jobs and close 30 stores as it battles with declining sales.
  • As the government winds down the Coronavirus Job Retention Scheme (CJRS), redundancies are expected to hasten. According to the latest HMRC CJRS data, the wholesale and retail sectors account for 18.5% of all furloughed employees. Meanwhile, luxury department store Harrods said it would cut 700 staff across all stores and the Arcadia Group, which owns Topshop, said it would cut 500 jobs in its head office.
  • On 19 June 2020, Ministers extended a ban on evicting UK high-street firms for non-payment of rent from 30 June 2020 to the end of September 2020. Landlords are also prohibited from sending tenants statutory demands, a formal request for payment or winding-up petitions. Alternative options including rent holidays or switching to monthly rather than quarterly payments.

 

  • The current guidance issued by the Foreign & Commonwealth Office (FCO) advises British people against all nonessential international travel as of 4 April. However, the FCO has published a list of countries which are exempt from this advice as of 4 July.
  • As of 8 June 2020, people arriving in the United Kingdom must self-isolate for 14 days. However, on 3 July 2020, the government published a travel corridor exemption list. This contains 59 countries and territories from which people will not have to self-isolate when arriving back in England from 10 July.
  • Virgin Atlantic has announced that it is to cut 3,000 jobs in the United Kingdom and end its operation at Gatwick Airport as a result of the coronavirus outbreak. Meanwhile, British Airways has announced plans to make 12,000 of its staff redundant due to the global collapse in air travel, as parent company International Airlines Group, announced a €1.7 billion (£1.5 billion) loss after tax during the first quarter, compared with a profit of €70 million in 2019. easyJet has said that it will cut 30% of its workforce, around 4,500 jobs.
  • Heathrow Airport passenger traffic fell by 97% year-on-year to 206,000 people in April 2020. Passenger numbers were 96.6% lower in May 2020 compared with the same month in 2019.
  • In the ONS Business Impact of COVID-19 Survey, 30.2% of firms in the sector reported that their revenue dropped by more than 50% between 1 June and 14 June 2020 compared with what is normally expected for the time of year.
  • In response to a significant decline in public transport usage, the government suspended all rail franchise agreements from March 2020, with all fares paid to the government, which will in turn take on the financial risk of running the network. According to government estimates, this is expected to come at a cost of £3.5 million, with that figure set to rise further with a fresh round of financial support in the pipeline. The government has also provided bus services with a £400 million bailout to ensure that they can keep running amid falling revenue and profit, as well as guaranteeing a further £200 million of planned investments. Transport for London has also received a £1.6 billion bailout in order to ensure that services can be maintained.

 

  • Government daily press conferences ended on 23 June, but were generating strong demand from the public. However, at the start of July it was announced that the government is planning to introduce daily televised press briefings, expected to come in by October.
  • Online publishers and broadcasters are benefiting from a surge in demand. Software publishers may also benefit as people work remotely.
  • Public venues including cinemas and libraries are expected to suffer, as they have remained closed during the lockdown. Low consumer confidence and health worries are likely to further disrupt operators in those industries once they reopen.
  • The rise in people having to work from home has significantly boosted demand for remote teleconferencing, such as Zoom and Microsoft Teams, and other ICT services.
  • According to an EY survey of 2,000 UK consumers at the start of April, 35% are making more mobile phone calls, to the benefit of telecommunications carriers.
  • UK national newspaper sales have plunged since the lockdown, with thousands of independent newsagents having closed. The Reuters Institute at the University of Oxford warned that the economic effects of coronavirus could potentially remove 10% of all frontline journalism jobs in the United Kingdom. However, the lockdown has caused a shift to people accessing news publishers online.

 

  • Insurers have widened the scope of business cover in light of the pandemic. Aviva, for instance, has extended commercial cover to the home as a place of business as employees continue to work from home. The firm has also altered its property policies to increase cover for unoccupied commercial buildings from 30 to 120 days.
  • On 19 June 2020, the Financial Conduct Authority (FCA) extended emergency measures to allow consumers to freeze loan and credit card payments until 31 October. The measures, which were announced in April for an initial period of three months, also include overdrafts, store cards and catalogue credit. The FCA also stated that firms must continue to offer support including further payment deferral or reducing payment amounts to a manageable level, for a further three months for consumers who have made use of credit holidays and are still experiencing financial difficulties.
  • Insurance companies including Aviva, Royal London and Legal & General, are delaying the issuance of new life insurance policies for up to three months if individuals indicate they are at risk from COVID-19. The questions cover whether they are currently displaying coronavirus symptoms, whether they have tested positive for the virus, and whether they have been in contact with someone whom they suspect had the virus.
  • The FCA is bringing High Court action to test 17 disputed policy wordings that have prevented payouts to thousands of holders of business interruption insurance. A ruling is expected in late July, after a 5-10-day court hearing in the second half of the month.

 

  • The UK government announced a £1 billion funding package for English schools to help children catch up on missed teaching during the lockdown. £350 million in subsidies has been allocated for a one-year national tutoring programme to help the most disadvantaged children by offering low-cost tuition for schools to purchase. The plan will only apply to pupils between the ages of five and 16, and will be delivered throughout the next academic year. However, the funding amounts to £80 per child, and will be more than 3% less than it was in 2010 in real terms.
  • UCAS anticipates up to 46,000 fewer domestic students starting university in September 2020 compared with September 2019. The warning was issued after UCAS data indicates requests to defer enrolments for the 2020-21 academic year are up 2% compared with the previous year.
  • According to the Institute for Fiscal Studies, 13 universities are at risk of insolvency and need a bailout in order to survive owing to declining student numbers, mounting pension liabilities and losses totalling £11 billion. Less prestigious institutions with lower cash reserves are expected to bear the brunt.
  • On 4 May, ministers unveiled a package to help universities. Initiatives include permitting institutions to charge the full £9,250 annual tuition fee for undergraduates while campuses remained closed and face-to-face classes were suspended, securing a potential £2.6 billion of revenue.
  • On 27 June, the government pledged a further £280 million of rescue funding towards research costs, particularly for high-priority areas such as medicine and research relating to antibiotic resistance, technology tackling waste and environmental degradation, and the impact of the pandemic on society. In addition, research-led institutions will be able to access long-term, low-interest loans, supplemented by a smaller amount of government grant funding to help balance the loss of income from falling international student numbers.
  • According to a consortium of youth charities, graduate job vacancies have fallen by 77% since January 2020 with an average of 100 graduates vying for each role. Meanwhile, according to the Institute of Student Employers, 20% of the UK’s largest graduate employers have suspended graduate recruitment selection processes and stopped issuing job offers.

 

  • Some consultancies have benefited as businesses try to understand the economic impact of the coronavirus on their operations and need advice on how to deal with the challenges. However, plummeting business confidence and business revenue would lower budgets and spending, in turn reducing demand and fees. Low consumer spending on non-essential services is also expected to contribute to the drop in demand.
  • If the number of insolvencies rises, legal activities are likely to benefit. Law firms have also recorded a boost in enquiries and requests to draw up wills, with the Law Society reporting a 30% increase on usual requests. Legal operators have also been in demand for advising and assisting both employers and employees regarding their rights and any issues they may face due to the pandemic. Businesses may seek help in addressing supply chain disruptions and settling disputes.
  • Advertising revenue is falling as businesses cut spending. The Advertising Association and WARC state that total UK ad spend is expected to decline by 16.7% in 2020 compared with 2019, equating to £4.2 billion. Digital ad spend is set to decline for the first time since its advent. Nonetheless, ad spend is expected to rebound and grow by 13.6% in 2021, but remain below the absolute investment levels reached in 2019.
  • Major advertising agencies, such as WPP and Publicis have had to cut staff numbers and undertake large cost-cutting initiatives, as industry demand has deteriorated significantly.

 

  • Sellers are worried about people coming in to view their homes while buyers are worried about visiting properties where residents may be infected. Also, rising health concerns are likely to lower consumer confidence, constraining demand for new properties.
  • With the easing of some restrictions from 13 May, estate agents can now open, while house moves and viewings can resume in England. However, social distancing and hygiene requirements involved in viewing properties remain. Previously, the UK housing market had been frozen as the government had issued guidance advising buyers and sellers to delay purchases until the coronavirus crisis passes.
  • Record-low interest rates of 0.1% set in March may help increase demand for properties and renting now that the housing market has reopened.
  • Due to the collapse in activity, many agencies have been forced to furlough staff. Plummeting confidence among buyers and sellers has also negatively affected the housing market. In the coming months, job losses and tighter lending conditions are likely to cause the housing market to contract further.
  • The Bank of England said that property prices could fall by 16% this year, but would then recover gradually as restrictions are lifted and buyers return to the market. Estate agency Knight Frank forecasts 7% drop in property prices in 2020.
  • According to Nationwide, UK house prices fell by 0.1% in June 2020 compared with the previous year, representing the first annual decline since December 2012. The average UK house price during the month was £216,403.
  • A residential market survey by the Royal Institution of Chartered Surveyors in May found that 93% of respondents reported a fall in buyer inquiries in April, while 96% stated that the number of sellers asking for their properties to be marketed had dropped.
  • According to Zoopla, since the government allowed estate agents to reopen in May, house sales in England were only 12% lower in the first week of June than in the first week of March.
  • Rightmove reports that demand for lettings in Great Britain was up by 22% towards the end of May compared with last year. This is largely due to lockdown break-ups, job losses and urgent relocations.

 

  • The European Commission has conditionally approved US biotech group Gilead Sciences’ remdesivir drug for treatment of COVID-19, the first medicine officially cleared for use against the disease by EU regulators. EU prices have not been announced and may vary from state to state, although Gilead Sciences, announced it would charge US$2,340 (approximately £1,872) for a five-day course.
  • The pandemic has hastened the uptick in technological adoption, with virtual clinics and consultations over video call becoming the new norm. Meanwhile, staff have been rapidly retrained to perform other roles to treat the surge of coronavirus admissions. Hospitals and GP practices are exploring the idea of multi-role staff becoming a permanent fixture, which could help to alleviate chronic workforce shortages. For instance, if well trained, GP receptionists could assist with telephone or online triage of patients.
  • The Department of Health and Social Care (DHSC) anticipates a potential backlog of up to 10 million patients by Christmas. Following this, the government is considering extending the existing partnership with private hospitals to access facilities until August. The current arrangement was struck in March and is due to end at the end of June 2020. The government would to pay all operating costs for the private hospitals including rent, external interest payments and wages, with the value of the deal estimated to be between £100 million and £125 million a week. NHS England is also considering a less comprehensive agreement under which it would book out a majority of private hospital beds for between eight months and two years.
  • Ahead of the UK’s decision to leave the European Union, the DHSC advised to stockpile at least six weeks-worth of inventory. However, stockpiles were eroded following the coronavirus outbreak and the United Kingdom is struggling to rebuild inventory amid the pandemic, disruption to international production of generic drugs in India and China, and the risks of a second wave interrupting global supplies later this year.  The government faces the prospect of trying to secure supplies through global procurement at a time when markets are already tight. 

 

  • Hotels, holiday accommodation, pubs and restaurants were ordered to close as of March 20 by Boris Johnson. However, takeaway establishments were allowed to remain open. On 11 May, the government published a plan of recovery and easing of measures, stating that hospitality venues will not reopen until 4 July at the earliest. On 23 June, Boris Johnson announced that the hospitality sector could reopen on 4 July, with the distancing rule in England reduced from two metres to 1 metre and other strict guidelines for operators to follow.
  • The stringent guidelines still in place may mean that reopening will not be viable for some venues.
  • Hotel chain Best Western recorded bookings increasing by 700% between 22 June and 26 June, while campsite booking website coolcamping.com reported a 750% increase in traffic compared with the previous year.
  • On 3 July it was announced that travellers in England can visit 59 destinations abroad without being subject to quarantine rules upon return from 10 July. This may provide some support for the tourism industry and in turn for the accommodation and food services sector.
  • Many businesses are struggling to pay workers’ wages, especially as revenue is significantly reduced. The government announced it will pay the wages of employees unable to work due to the pandemic in a radical move aimed at protecting people's jobs through the Coronavirus Job Retention Scheme (CJRS). It will pay 80% of salary for staff who are kept on by their employer, covering wages of up to £2,500 a month. The wage subsidy will apply to firms where bosses have already had to lay off workers due to the coronavirus, as long as they are brought back into the workforce.
  • The CJRS has been extended until the end of October. However, from September, employers will have to contribute 10% of the 80% paid to furloughed staff, while in October this rises to 20%.
  • On 17 March, the Chancellor confirmed that he was extending the business rates holiday to all businesses in the hospitality sector for the 2020-21 tax year. He also announced a Retail, Hospitality and Leisure Grant of up to £25,000 for smaller businesses with a rateable value of less than £51,000.
  • UKHospitality believes that approximately 500,000 roles in the sector have been axed since the start of March, while a further 500,000 seasonal workers may no longer be offered jobs as vacancies in the hospitality sector have plummeted.

 

  • The Premier League restarted on 17 June 2020. All 92 remaining matches in the season will be screened live on TV. The majority of games will be on Sky and BT Sport, but Amazon will also stream four games and the BBC will show four Premier League matches live, marking the first time it has broadcast live top-flight football since 1988. However, the league faces a loss of £500 million due to broadcasting rebates and the loss of matchday revenue from lockdown measures over the 2019-20 season. Professional services firm Deloitte expects football clubs’ matchday revenue to be 50% lower over 2020-21, largely due to loss of ticket revenue and social distancing measures.
  • The government has pledged £1.6 billion to an emergency support package to help protect theatres, galleries and museums. England has been allocated £880 million in grants and £270 million in repayable loans. £33 million has been allocated to Northern Ireland, £97 million to Scotland and £59 million to Wales.  A further £100 million will be earmarked for national cultural institutions in England and the English Heritage Trust, and £120 million to restart construction on cultural infrastructure and for heritage construction projects.
  • Even as lockdown measures are eased, UK cinemas are expected to struggle. Aside from social distancing measures, cinemas will contend with delayed premiere dates and film releases as production operations have been mothballed. For instance, originally scheduled for a release date of 1 May 2020, Marvel's Black Widow has been pushed back to 6 November 2020. At present, five of Marvel’s films rank in the top 10 grossing films of the 21st century.

 

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