Two-thirds of firms say Covid-19 lockdown hit sales in worst month since financial crisis

This article is more than 4 months old

This article is more than 4 months old

Almost two-fifths of Britain’s retailers have closed for business completely as a result of a Covid-19 lockdown that has prompted a collapse in consumer spending unmatched since the financial crisis in late 2008.

April’s monthly health check of high street and online sales from the CBI reported that two-thirds of businesses had been adversely affected by the pandemic and almost all said they were experiencing cashflow problems.

The employers’ organisation’s distributive trades survey polled 70 retailers in the three weeks after the UK economy’s enforced closure was announced and found that 71% said activity was down on a year earlier, compared with 16% reporting an increase.

The balance of –55 points was the joint lowest since the survey was first published in 1983 and only matched by December 2008, shortly after the near-collapse of the global banking system.

Every sector – even food and drink – reported an annual fall in sales, but outlets selling clothing and footwear, furniture and carpets and recreational goods were especially hard hit.

Wholesalers and car dealers – also covered by the survey – had an even tougher start to the lockdown than retailers. The CBI said 79% of retailers were suffering from an annual fall in business against 11% reporting an increase, but every one of the 24 motor traders surveyed said activity was down.

Despite some hints from government ministers that the lockdown might soon be relaxed, retailers were pessimistic about the chances of a pick-up in business. A balance of -54 percentage points said they anticipated a fall in annual sales in May – the weakest expectations in the survey’s history.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

According to the survey, which was carried out between 27 March and 15 April:

67% of retailers said the Covid-19 outbreak was having a significant negative impact on their sales.

39% of retailers reported a total shutdown of UK activity due to the outbreak.

44% of retailers reported furloughing staff, while 8% reported permanent staff layoffs.

96% of retailers reported cashflow difficulties, with 40% facing difficulties meeting tax liabilities. A further 31% of retailers also faced constraints on the availability of external finance.

Rain Newton-Smith, the CBI chief economist, said: “It’s no surprise that the lockdown is hitting retailers hard. Two-fifths have shut up shop completely for now. And sales of groceries and other essentials also fell, suggesting households may have been dipping into stockpiles built up prior to the lockdown or tightening their belts more generally as incomes take a hit.

“Although the livelihoods of hundreds of thousands of employees in retail remain at risk, there are encouraging signs that the government’s job retention scheme is providing genuine relief, with many opting for temporary rather than permanent layoffs.”