'Extraordinary' collapse of Lancashire economy during coronavirus lockdown

The results of the Quarterly Economic Survey from the Lancashire Chambers of Commerce have revealed an unparalleled contraction in economic activity in the second quarter as the coronavirus closed large parts of the economy.

The vast majority of indicators in the survey dropped to historic lows, with declines far exceeding those seen at the height of the global financial crisis.

The Q2 2020 survey, compiled by the county’s three Chambers of Commerce in association with MHA Moore and Smalley Chartered Accountants, shows that the services sector suffered particularly badly, with consumer-facing firms most acutely exposed to economic headwinds from the pandemic.

The service sector domestic sales balance dropped a staggering 84 points on the previous quarter, whilst the advance orders/bookings balance lost 73 points.

There was little evidence to support a quick rebound of the economy as all of the business confidence measures hit historic lows.

Turnover and profitability expectations for the year ahead, along with business investment plans, slumped across both sectors. Cashflow – a key indicator of business’ health – is at its lowest level, with two thirds of respondents reporting worsening cashflow.

Commenting on the results, Babs Murphy, Chief Executive at the North and Western Lancashire Chamber said: “After three months of lockdown and almost complete closure of the economy, the results of this survey were always going make painful reading.

"However, the scale of the collapse is quite extraordinary. This also comes after a very weak set of figures in Q1 before the pandemic really got going.

“The government’s fiscal support packages have provided a lifeline for many businesses but further support is going to be needed, especially in the leisure, tourism and hospitality sectors as consumers face up to new social distancing rules.

"Consumer confidence will be critical to the recovery, although there are real concerns for employment prospects as the furlough scheme is reduced in the coming months.

“Our survey results demonstrate the need for swift and substantial action by the government to jump-start the economy, especially as we are likely to face further headwinds from exiting the EU at the end of December.”