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

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by IBISWorld
Aug 20 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.

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  • 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%.?According to the National Farmers’ Union, steep falls in liquid milk prices and demand meant that one-quarter of UK dairy farmers had become financially unviable in April 2020.
  • 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.
  • According to the Office for National Statistics (ONS), agriculture output fell by 4.8% during the three months through June 2020.
  • 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.

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  • Despite a lift in aviation and demand for air passenger transport, it remains historically low and the price of Brent crude has followed the same downward trajectory. As of 19 August 2020, the price of Brent crude was US$44.20 per barrel, down 32% year-on-year.
  • In early August 2020, gold prices shot to record highs and broke through the US$2,000 (£1,600) an ounce mark for the first time in history. Prices have spiked as virus cases have kept rising and governments have unveiled multi-billion stimulus plans and lowered interest rates.

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  • The coronavirus outbreak and the associated lockdown has resulted in a 20% reduction in demand for electricity in Great Britain. National Grid expects the cost of balancing the system to be £826.3 million between May and August 2020; this figure includes £21 million in constraint payments paid to wind generation plants in May 2020, up from £8.3 million in the previous month and £4.2 million in May 2019. A further £140 million of rebalancing costs were paid in June 2020, 57% higher than a year earlier.
  • In June 2020, Ofgem launched a £350 million support scheme to help energy suppliers that do not qualify for the government’s industry-wide support packages. This is intended to avoid the collapse of electricity and gas suppliers, which face an expected rise in bad debt in the coming months in line with the end of Coronavirus Job Retention Scheme.
  • Based on data published by the ONS, a report by Catax estimates that total business investment in the utilities sector fell by 9% in the first quarter of 2020 to £3.9 billion, from £4.3 billion in Q1 2019. This was due to concerns over 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. However, this is expected to be offset by lower wholesale gas and electricity prices, leading to a reduction in tariffs.
  • 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.

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  • According to the ONS, output in the construction sector fell by 35% over the three months through June 2020; this includes a 51.2% decline in private new housing output and a 33.4% decline in private commercial output.
  • The IHS Markit UK Construction PMI increased to 58.3 in July 2020, from 55.3 in June. This represents the second consecutive month of expansion and the steepest rise in output since October 2015.
  • 4% of construction firms surveyed in the ONS Business Impact of COVID-19 Survey between 13 July and 26 July stated that their revenue remained below what they would usually expect for the time of year.
  • On 30 June 2020, the government announced radical reforms to the UK’s planning system as they seek to rebuild the economy following the coronavirus outbreak. Under the relaxed rules a wider range of commercial buildings will be allowed to change to residential use without the need for a planning application. Additionally, builders will no longer need a normal planning application to demolish and rebuild vacant and redundant residential and commercial buildings if they are rebuilt as homes, and property owners will be able to build additional space above their properties via a fast-track approval process.
  • Building site closures are expected cause the United Kingdom to miss out on key housing targets. According to Savills, lockdown measures brought work on 220,000 new homes to a standstill, undermining the government’s target of 300,000 homes built a year by 2025. Research from property agency Savills and housing charity Shelter has forecast a shortfall of 85,000 new homes in 2020.
  • Construction output is expected to fall by 25% in 2020 in a best-case scenario forecast by the Construction Products Association.

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  • 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.
  • In a survey conducted by manufacturing trade group Make UK on 14 July 2020, 53% of the 174 manufacturers surveyed stated that they were planning to make redundancies in the next six months. This is up from 25% in May 2020.
  • According to the ONS, manufacturing output fell by 20.2% during the three months through June 2020. This was driven by declines in 12 out of 13 subsectors, most notably the manufacture of transport equipment, which fell by 49.1%.
  • The IHS Markit UK Manufacturing PMI rose to 53.3 in July 2020, from 50.1 in the previous month, pointing towards a stabilisation in operating conditions in the sector. According to the survey, new orders rose at the fastest pace since 2018.
  • Every major carmaker in the United Kingdom 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 (SMMT) estimates that this will cause an 18% drop in UK car production in 2020, with production down 42% year-on-year during the first six months of 2020.
  • According to the SMMT, new car registrations were down 34.9% in June 2020 compared with June 2019. Additionally, year-to-date registrations were 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 conducted between 13 July and 26 July stated, 52.1% of firms in the manufacturing sector stated that their revenue remained below what they would usually expect for the time of year.

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  • Tesco has reportedly demanded suppliers to accept ‘offensive’ discounts of up to 50%, which will be partly funded by scrapping promotions. Wholesalers are expected to lose out, as they are price-takers and struggle to contend with the large supermarket’s buyer power.
  • The closure of non-essential retail establishments prompted food and drink wholesalers to rethink their businesses. While some, such as Brakes, started supplying products to supermarkets, others ventured into supplying the pubic directly. While this is regarded as more of a short-term solution than a long-term move, it has prompted some food and drink wholesalers, such as Dunns, to rethink their existing business model.
  • 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.
  • Over half of UK manufacturers expected to make cuts over the next six months, with automotive and other sectors anticipating a sustained downturn in demand. Such cutbacks in operations would also have a negative effect on the wholesale trade sector.

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  • In the first quarter of 2020, 38 FTSE retailers issued profit warnings, followed by a further nine in the second quarter, bringing the total to 47 over the six months through June 2020. This exceeds the total number recorded for the whole of 2019. 36 of the warnings issued by listed retailers cited the pandemic as the reason for a material downgrade to their profit expectations. Despite lockdown restrictions easing, footfall still remains below pre-pandemic levels. The pandemic has also accelerated the shift online, requiring retailers to adapt.
  • According to the British Retail Consortium, UK retail sales remained robust in July as more shoppers returned to the high street following the easing of lockdown restrictions. Home improvements and homeworking were the largest areas of growth but sales of luxury items such as jewellery and watches remained subdued. Sales of clothing, footwear, and health and beauty products also remained low.
  • According to research by YouGov and the Centre for Economics and Business Research, consumer confidence rose 1.7 points to 100.8 in July while business activity continued to rise. However, consumers still remain cautious with 82% of respondents expecting a recession within the coming 12 months and at least 92% expecting unemployment to rise over the next year. This is expected to adversely affect discretionary expenditure.
  • The British Fashion Council has warned in July 2020 that as many as 240,000 jobs, or 27% of the workforce, are expected to be lost in the UK fashion industry over the next 18 months due to the coronavirus.

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  • On 3 July 2020, the government published a travel corridor exemption list, containing 59 countries and territories from which people will not have to self-isolate when arriving back in England from 10 July. However, several countries have since been removed from the list, including Spain, France and the Netherlands, with the Foreign and Commonwealth Office advising against all non-essential travel to these countries and enforcing a 14-day self-isolation period for people returning from any of the countries.
  • British Airways has announced that it will retire all of its Boeing 747 fleet following the sharp downturn in travel caused by the coronavirus outbreak.
  • 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 its parent company, International Airlines Group, announced a €1.7 billion (£1.5 billion) loss after tax during the first three months of 2020, compared with a profit of €70 million in 2019. easyJet has said that it will cut 30% of its workforce, equating to around 4,500 jobs.
  • Heathrow Airport passenger traffic was up 147.4% in July 2020 compared with the previous month. However, the number of passengers, which was recorded at 866,655 for the month, remains 88.8% below levels recorded in July 2019.
  • According to sample estimations from the International Air Transport Association, international air passenger numbers will decline by 55% overall in 2020, with passenger numbers only returning to pre-coronavirus levels in 2024.
  • In the ONS’s Business Impact of COVID-19 Survey, 18.8% of firms in the sector reported that their revenue had dropped by more than 50% over the two weeks through 12 July 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 billion, with this 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.

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  • The pandemic has fostered an online boom, although cyber security threats have quickly followed. According to data from?cybersecurity company Darktrace, the proportion of attacks targeting home workers increased from 12% of malicious email traffic before the UK’s lockdown began in March to more than 60% six weeks later Other common methods have included fake requests to reset virtual private network (VPN) accounts and fake sign-in pages for video conferencing accounts. Meanwhile, HMRC is investigating 10,428 reports of phishing scams designed to exploit the coronavirus pandemic, although numbers have fallen as lockdown measures have eased. 2,558 incidents were reported to HMRC in June, involving email, SMS, social media, and phone scams, compared with 5,152?in May.
  • 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 the coronavirus could remove 10% of all frontline journalism jobs in the United Kingdom. Daily Mail and General Trust (DMGT), which owns The Daily Mail, Mail Online, Metro and the i newspaper, has started consultations with staff across its publishing arm DMG Media. As part of the cutbacks, DMGT is set to shut down the Mail on Sunday’s Event magazine, while redundancies are also expected at You
  • Online publishers and broadcasters are benefiting from a surge in demand. Software publishers may also benefit as people work remotely.

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  • The mortgage market showed some signs of recovery in June, but remained weak in comparison to pre-coronavirus. Approvals for mortgages for house purchase increased to 40,000 in June, up from the record low of 9,300 in May, but still below February’s pre-coronavirus level of 73,700. Meanwhile, according to the Intermediary Mortgage Lenders Association, 59% of offers resulted in a completion in the second quarter of 2020, compared with 85% pre-pandemic over the three months through December 2019.
  • Households repaid £86 million of consumer credit in June 2020, following average monthly repayments of around £5 billion since March. The interest rate on new consumer credit borrowing fell 68 basis points to 4.42% in June 2020, while credit card interest rates fell 42 basis points to 17.94%.
  • 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. Additionally, the FCA 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 facing financial difficulties.

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  • A-level grades for students across the United Kingdom have been revised after a U-turn over grading systems. On 13 August 2020, almost 40% of A-level grades awarded were lower than teachers' predictions. The revision means many more students have met university offer requirements. Many universities will be able to accept extra students, particularly now the government has withdrawn its cap on the numbers each institution can admit. However, there could be logistical problems for some oversubscribed universities or courses such as adequate space, accommodation, lab equipment and staff while adhering to social distancing.
  • The Institute for Fiscal Studies estimates that universities could lose anywhere between 7.5% and 50% of their yearly income over the next four years as the number of international students falls owing to the pandemic. In response, institutions are cutting the jobs of thousands of academics on short-term contracts. 13 universities are at risk of insolvency and require a bailout in order to survive due 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.
  • The UK government announced a £1 billion funding package for English schools to help children catch up on teaching missed 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 over 3% less than it was in 2010 in real terms.

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  • Some consultancies have benefited from businesses trying to understand the economic impact of the coronavirus on their operations and needing advice on how to deal with the challenges. However, plummeting business confidence and revenue are expected to lower budgets and spending, reducing demand and fees. Low consumer spending on non-essential services is also expected to contribute to the drop in demand.
  • The legal market contracted 2.5% in the first quarter of 2020, but there are pockets of growth.?Employment law is booming as firms seek to find out the legal ramifications of placing over nine million workers on furlough and prepare for the likely coming wave of redundancies. Meanwhile, commercial practice areas are on the frontline of managing the legal response to the coronavirus and insolvencies. Smaller firms are likely to fare better during the crisis, as they are less exposed to areas that are anticipated to contract.
  • UK advertising expenditure on traditional media, such as TV, print, radio and cinema, fell by from £2.3 billion to £1.1 billion, or 48%, between the start of lockdown on 23 March and the end of June. With the public told to stay at home, high streets shut and travel halted, many companies froze marketing budgets. For instance, McDonald’s cut its marketing budget by 97% from £43.5 million to £1.3 million. Major advertising agencies, such as WPP and Publicis, have had to cut staff numbers and undertake large cost-cutting initiatives, as demand has deteriorated significantly.

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  • A number of firms have reported improved demand for properties since May, when estate agents’ offices and show homes could reopen from lockdown. A further jump in enquiries came in July after Chancellor Rishi Sunak announced a suspension of stamp duty on property sales of up to £500,000 until March 2021. A two-month extension to the Help to Buy scheme in England has also been offered. According to the Managing Director of real estate agency Chestertons, the number of new buyers registering and making offers on properties was 36% higher in July than a year earlier.
  • According to Rightmove, the UK property market is experiencing a record-breaking summer boom, with the number of sales agreed from mid-July to mid-August totalling more than £37 billion. Over the past 10 years, the average monthly fall in asking prices during the summer months, although figures indicate asking prices are up, has been 1.2% in 10 out of 12 regions as individuals continue to escape the city in favour of commuter belts and coastal areas.
  • UK house prices have increased with demand. According to Halifax, the spike in demand has pushed average property values up by 1.6%, or £3,770, month-on-month in July. The average UK property value was £241,604 in July, up from £237,834 in June.

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  • At the start of the pandemic, the NHS struck a deal with private hospitals and medical practitioners to access hospitals' beds, staff and equipment at cost price, costing an estimated £400 million per month, regardless if facilities were used. As infection rates and hospital admissions have stabilised, NHS England is scaling back the private-sector deal.
  • According to data from the NHS COVID-19 Vaccine Research Registry, more than 100,000 individuals have signed up for UK vaccine trials, although only 3% are from British Asian backgrounds and the NHS is launching a fresh attempt to recruit more volunteers.
  • On 4 August 2020, the UK government secured early access to 60 million doses of the Novavax vaccine and 30 million doses of the Janssen vaccine. The United Kingdom will continue to support and provide infrastructure to Novavax in running a Phase 3 clinical trial. The company plans to manufacture its vaccine in the United Kingdom with Fujifilm Diosynth Biotechnologies, as well as co-found a global clinical trial with the Janssen Pharmaceutical Companies of Johnson and Johnson.
  • The United Kingdom rolled out new rapid COVID-19 testing across hospitals and care settings, which can produce results in 90 minutes. According to a government press release, 450,000 LamPore swab tests will be available across adult care settings and laboratories from the week commencing 10 August 2020. The DnaNudge test has already been trialled in eight London hospitals to analyse DNA in nose swabs and it is expected that 5,000 devices will be used in the coming months.

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  • According to the latest HMRC figures, the Eat Out to Help Out scheme was used more than 35 million times in the first two weeks. The government has set aside £500 million to fund the scheme. According to Springboard, which measures footfall, the number of people in retail destinations after 6.00pm on Monday 3 August, the first day of the scheme, was 19% higher than the week before. Meanwhile, lunchtime visits were up 10%.
  • Staycation bookings have boomed as quarantine rules have tightened. According to holiday accommodation website Awaze, site traffic increased by 25% on Friday 14 August compared with the previous day, as France and Belgium were added to the self-isolation list. Out of the 19,000 houses the company offered in the United Kingdom, only 60 were still available in August and more than half of those were in Scotland, while many were for groups of 20 or more. As demand has increased, prices have followed. Prices across Awaze’s UK businesses were up 18% year-on-year in August.
  • According to the July 2020 Coronavirus Job Retention Scheme statistics, the accommodation and food services sector has the highest uptake of the scheme, at 87%.

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  • Face treatments in beauty salons, spas and mobile or home-based beauty businesses in England resumed on 15 August. The reopening of casinos, bowling alleys, indoor performances, pilots of large gatherings at sport venues and conference centres and the expansion of wedding receptions to allow up to 30 people were also permitted.
  • According to the ONS, the arts, entertainment and recreation industries were worst hit by the pandemic, with 45% of the workforce furloughed, and only 29% of furloughed employees brought back to work, according to the Royal Society for the Encouragement of Arts, Manufactures and Commerce. Meanwhile, data from job vacancy aggregator Azuma and the ONS indicates the sector faced the fastest rate of decline in job vacancies and the largest percentage of businesses with operating costs exceeding turnover, at 42%.

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