May 4, 2020 / 6:27 AM / a month ago

Top UK companies expect COVID-19 to cut sales by a fifth - Deloitte

LONDON (Reuters) - Britain’s largest companies expect the coronavirus to reduce their sales by more than a fifth this year and are gloomier than during the 2008-09 financial crisis, according to a survey published on Monday by accountants Deloitte.

FILE PHOTO: Pedestrians walk along the Southbank in view of skyscrapers in the financial district in London, Britain February 17, 2020. REUTERS/Simon Dawson/File Photo

The quarterly survey of chief financial officers at more than 100 of Britain’s largest businesses showed the biggest drop in confidence since it began in 2007, and the lowest risk appetite since the global financial crisis in 2008.

“CFOs expect the lockdown to ease in May and June and demand in their own sectors to start recovering later this year. But there is no expectation of a quick snap-back in activity,” Deloitte’s chief economist, Ian Stewart, said.

Britain’s government announced a lockdown that closed most non-essential businesses to the public on March 23, and is due to review the restrictions this week - though officials have said it is probably too soon for major changes.

Most CFOs do not expect revenues to return to pre-crisis levels for at least a year, Stewart said. This year, CFOs on average expect sales to be 22% lower than they had forecast before the coronavirus hit Britain.

Last month, British government forecasters published a scenario which showed economic output falling by more than a third in the second quarter, and dropping by 13% over the course of 2020 as a whole.

Nearly 30,000 people have died so far in British hospitals and care homes, one of the highest death tolls in Europe.

The British Chambers of Commerce on Sunday called on the government to set out clearer health and safety rules and ensure sufficient supplies of face masks and gloves before telling businesses to reopen.

Under the current rules, some British people can still go to work if they cannot work from home, but must stay two metres apart from colleagues where possible. Customers are not allowed on the premises of firms selling non-essential goods and services.

Official figures last week showed that a quarter of businesses of all sizes reported that their sales had more than halved due to the lockdown.

The Deloitte survey showed that among large companies, 59% were using or planned to use a government job guarantee scheme that pays staff 80% of their wages, similar to the proportion for other firms.

Some 30% of companies said they had used, or planned to use, the Bank of England’s Covid Corporate Financing Facility (CCFF), which so far has lent 15.9 billion pounds ($19.9 billion) to large companies which had an investment-grade credit rating or similar before the crisis.

Reporting by David Milliken; editing by Guy Faulconbridge and Michael Holden

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