Cornwall Chamber of Commerce has released the latest results from its Quarterly Economic Survey (QES).

Unsurprisingly, the QES Q2 report, which was conducted by local survey firm PFA Research, discovered that significant numbers of Cornish businesses are operating below capacity following the coronavirus pandemic.

Results from the survey, of which 167 participants took part, also revealed that cashflow has worsened and business are looking towards making a huge shift in their working practices.

Comparing the pressures to raise prices from Q1 to Q2, there has been an increase in market pressures with overheads remaining high on the list. Prior to Covid-19, competition was seen as a much larger external pressure in comparison with Q2.

Looking at recruitment there has been a large decrease since last year, but more than half made no changes to their workforce. In terms of businesses looking to recruit there was an increase from Q1 to Q2 when looking to hire in the professional/managerial role.  A small number of businesses are still looking to recruit, although a large proportion of those trying have had difficulties recruiting suitable staff.

The balance on expectation for change in turnover and profitability is at its lowest point since the QES began in 2015.

Reacting to the Q2 results, chamber CEO Kim Conchie said: “Inevitably Q2 2020 is a survey of unprecedented times showing a real disconnect with previous quarters and in many ways reflective of the 20.4% drop in UK GDP for April.

“For Cornwall & Scilly some results are not as bad as I’d feared – 18% of businesses are still recruiting for example. But the overall picture shows issues which need addressing immediately to avoid mass redundancies and business closures. 78% of businesses are operating below capacity and 54% reporting that sales are down – these stats could quickly feed through to job losses unless steps are taken to reboot the economy.”

This quarter, accountancy firm Bishop Fleming sponsored two questions with in the QES on business planning.

Bishop Fleming partner, Alison Oliver, said: “Whilst 75% of respondents in the survey have some form of management information system in place, less than half have a documented business plan. Now more than ever, business owners and directors need to be reviewing their business plans, forecasts and finances.

“I would urge business owners to plan ahead, look at what support is available, and seek advice in order to remain as flexible as possible to face future challenges.”

Key findings in the Q2 2020 survey

  • 14% are operating at full capacity, with 78% operating below capacity
  • Only 12% report an increase in UK Sales, with an overall net balance of -54%
  • Nearly two thirds (65%) say their cashflow has worsened over the last 3 months. For 14% of businesses the cashflow has remained constant and 18% have seen an increase
  • In terms of change to workforce, 10% say they have increased their workforce, and 26% have decreased. 53% had no change in their workforce
  • 14% expect to increase workforce over the next quarter, but 26% predict a decrease. 49% expect their workforce to remain unchanged
  • The proportion attempting to recruit drops to 18%. Of those, 53% have experienced difficulties recruiting the right people
  • 78% of businesses have stated that they expect to change their working practices following the pandemic. 43% suggest that they will be implementing remote or flexible working
  • The balance on expectation for change in turnover is -36% (i.e. those expecting an increase less those expecting a decrease). Expectation of profitability has a net balance of -44%

The Full QES Report can be found here.