Impact of Covid-19 on
UK businesses –
evidence from the
Decision Maker Panel in
The Decision Maker Panel (DMP) is a survey of Chief
Financial O!cers from small, medium and large UK
businesses. We use it to monitor developments in
the economy and to track businesses’ views. This is a
summary of results on the impact of Covid-19
(Covid) on UK businesses, up until November 2020.
Published on 17 December 2020
The Decision Maker Panel (DMP) is a survey of Chief
Financial O!cers from small, medium and large UK
businesses. We use it to monitor developments in the
economy and to track businesses’ views. This is a summary
of results on the impact of Covid-19 (Covid) on UK
businesses, up until November 2020.
Covid has had a large impact on UK businesses. Although there was a
marked improvement in reported sales from around -30% relative to
what they would have been in the absence of Covid in 2020 Q2,
respondents to the October DMP survey estimated that sales were still
17% lower than they otherwise would have been in 2020 Q3, while
employment was 8% lower and investment 24% lower (Chart 1). In the
November survey, only a modest further recovery in sales was expected
in 2020 Q4, where sales were expected to be 15% lower than they
would have been. However, further improvement was expected in the
first half of 2021, such that sales were only expected to be around 2%
lower by 2021 Q2 (Chart 1). Investment was also expected to recover,
but more slowly and by less than sales.
Chart 1: Businesses continued to expect Covid to have a large
impact on their sales, employment, hours worked, investment and
costs over the next year
Expected impact of Covid on sales, employment, hours worked, investment
and costs (a)
While firms’ near-term expectations on the impact of Covid on sales
were broadly unchanged in the November survey relative to previous
months, expectations for the first half of 2021 were revised up (Chart 2).
The largest revision, relative to the October survey, was for 2021 Q2 at
6 percentage points. That may reflect the announcement of positive
(a) The results are based on the questions: ‘Relative to what would otherwise have
happened, what is your best estimate for the impact of the spread of Covid-19 on the
sales/employment/average hours worked per active employee/capital expenditure of your
business in each of the following periods?’; and ‘Approximately what percentage of your
employees fall into the following categories in each of the following periods? (i) Still
employed but not required to work any hours (eg ‘on furlough’), (ii) Unable to work (eg due to
sickness, self-isolation, childcare etc.), (iii) Continuing to work on business premises, (iv)
Continuing to work from home’. Data for 2020 Q2 are from the July DMP survey, and data for
2020 Q3 are from the October DMP survey. Data for 2020 Q4, 2021 Q1, 2021 Q2 and 2022
and beyond are from the November DMP survey. The effects on total hours worked are
calculated from responses to the questions on employment, average hours and percentage
of employees on furlough. Employees on furlough are assumed to work zero hours. Data on
the impact of Covid in 2020 Q1 have not been collected in the DMP. Data shown for Q1 are
absolute changes in aggregate ONS data for private sector output, business investment,
private sector employment and hours worked between 2019 Q4 and 2020 Q1. The impact
on unit costs is assumed to be zero in Q1.
news about vaccines during the survey window from Pfizer and
Moderna, on 9 November and 16 November respectively. The OxfordAstraZeneca vaccine news came after the survey window had closed.
Chart 2: Businesses revised upwards their expectations on the
impact of Covid on sales in 2021 in the November survey
Revisions to expected impact of Covid on sales (a)
There was also an improvement in employment expectations in the
November survey, again most notably in the first half of 2021. The
impact of Covid on employment was expected to ease from -6% in 2020
Q4 to -3% in 2021 Q2 (Chart 1), the latter represents improvement from
-7% in the October survey. As well as positive news on the vaccine, this
may also have reflected the extension of the Coronavirus Job Retention
Scheme (announced on 30 October). The percentage of employees on
furlough (still employed but not required to work any hours) increased in
November to 11%, up from 5% in October but still well below the peak
of 37% in May (Chart 3). This proportion was expected to fall back to
(a) The results are based on the questions: ‘Relative to what would have otherwise
happened, what is your best estimate for the impact of the spread of coronavirus (Covid-19)
on the sales of your business in the following quarters?’. In November, respondents provided
estimates for 2020 Q4, 2021 Q1, 2021 Q2 and 2022 and beyond. In September and
October, respondents provided estimates for 2020 Q3, 2020 Q4, 2021 Q1 and 2021 Q2.
Latest data available for 2020 Q2 estimates are from the July DMP survey.
5% in 2021 Q1. Employees who remained active were also expected to
work 4% fewer hours, on average, than they would have done because
of Covid in 2020 Q4.
Chart 3: The proportion of private sector employees on furlough
increased in November following the extension of the Coronavirus
Job Retention Scheme
Proportion of private sector employees on furlough (a)
For the first time, the November survey also asked businesses how they
expect Covid to affect them over 2022 and beyond. Both sales and
employment were expected to largely recover by then, with the impact
on sales expected to be +0.25%, and on employment -0.5%. Investment
was expected to be 3% lower by 2022 and beyond. This is in contrast to
the DMP survey responses in relation to the UK’s decision to leave the
EU, where businesses continued to expect a larger reduction in sales
over the longer term even if a trade agreement is reached.
(a) The results are based on the question: ‘Approximately what percentage of your
employees do you expect to fall into the following categories in each of the following
periods?’. Respondents could assign their employees to the following categories: (i) Still
employed but not required to work any hours (e.g. ‘on furlough’), (ii) Unable to work (e.g. due
to sickness, self-isolation, childcare etc.), (iii) Continuing to work on business premises, and
(iv) Continuing to work from home. December 2020 and 2021 Q1 data points are based on
estimates provided by businesses in the November survey.
Businesses reported that the various measures (social distancing, hand
washing, masks and other measures) to control the spread of Covid
were expected to increase the cost of running a business over the next
year. In November, businesses reported that their average unit costs
were around 7% higher in 2020 Q4 due to Covid, and that they
expected this impact to persist into next year (Chart 1). By 2021 Q2,
costs were expected to still be 5% higher than they would otherwise
have been, and they were expected to still be around 2% higher in 2022
Covid continued to have a larger impact on some industries than others,
with the industries where a high proportion of consumer spending
involves face-to-face contact and/or social activity worst affected. In the
November survey, businesses in recreational services, accommodation
and food and transport and storage reported the largest expected
declines in sales in 2020 Q4, of 49%, 29% and 27% respectively (Chart
4). Businesses in these industries also reported the largest reductions in
their capacity to produce goods and services as a consequence of
measures to contain Covid.
Chart 4: Measures to contain Covid have had a large impact on
sales in 2020 Q4 in the recreational services, accommodation and
food and transport and storage sectors
Expected impact of Covid on sales in 2020 Q4, by sector (a)
(a) Data from the November DMP survey. The results on sales expectations are based on
the question: ‘Relative to what would otherwise have happened, what is your best estimate
for the impact of the spread of Covid-19 on the sales of your business in 2020 Q4?’.
Overall uncertainty fell back a little but remained high in November
(Chart 5). The percentage of businesses reporting that uncertainty was
high or very high fell from 75% in October to 67% in November, but
remained much higher than at the start of the year, prior to the
pandemic. There was also a more marked fall in a measure of
uncertainty derived from the distribution of future year-ahead sales
growth. Covid remained the dominant source of uncertainty for
businesses. In the November survey it was the largest source of
uncertainty for around 44% of businesses, and in the top three sources
for around 85%, similar to previous months.
Chart 5: Overall uncertainty fell back in November, but remained
higher than at the start of the year
Measures of uncertainty (a)
(a) The overall uncertainty data is based on the question: ‘How would you rate the overall
uncertainty facing your business at the moment?’. Respondents could select one of the
following options: (i) Very high – very hard to forecast future sales, (ii) High – hard to forecast
future sales, (iii) Medium – future sales can be approximately forecasted, (iv) Low – future
sales can be accurately forecasted, (v) Very low – future sales can be very accurately
forecasted. The data series plots the percentage of respondents that responded either ‘Very
high’ or ‘High’. The sales subjective uncertainty data are based on the question: ‘Looking a
year ahead from the second quarter of 2020 to the second quarter of 2021, by what %
amount do you expect your sales revenue to have changed in each of the following
scenarios? (lowest, low, middle, high and highest)’ and respondents were asked to assign a
probability to each scenario. The data series plots the mean standard deviation of expected
year-ahead sales growth (per cent) between these scenarios.
The DMP consists of the Chief Financial Officers of small, medium and
large UK businesses operating in a broad range of industries.
We survey panel members to monitor developments in the UK economy
and to track businesses’ views on them. This work complements the
intelligence gathered by our Agents.
This note is a summary of surveys conducted with DMP members up to
November 2020. The November survey was in the field between 6 and
20 November. In November, there were around 8,700 panel members
and we got around 2,964 responses.
Further monthly data from the November survey for a limited number
of DMP series were published on 3 December 2020. Aggregate level
data for all survey questions are published on a quarterly basis. Data
from the August to October surveys were released on 5 November.
More information can also be found on the DMP website .
The panel was set up in August 2016 by the Bank of England and with
academics from Stanford University and the University of Nottingham. It
was designed to be representative of the population of UK businesses.
All results are weighted using employment data. See Bloom et al
(2017) for more details.
The DMP receives funding from the Economic and Social Research
©2022 Bank of England
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