LONDON- The coronavirus outbreak has reversed a recent upturn in British business leaders’ optimism, with confidence now at a six-month low, a survey by the Institute of Directors showed on Monday.
The business outlook turned positive at the end of last year after Prime Minister Boris Johnson’s election win in December cleared some short-term uncertainty around Brexit and removed the possibility of a left-wing Labour government.
But the outbreak of the coronavirus meant business leaders’ outlook on the economy turned negative in March 2020, with one in five survey respondents saying that the outbreak represents a high or severe threat to their business.
“With the prospect of orders drying up and staff in quarantine, some firms will be looking at a potential cashflow crunch, and confidence in the economy has taken a knock,” Tej Parikh, chief economist at the Institute of Directors, said.
A third of business directors said they had cancelled or restricted staff travel while almost half had encouraged remote working. Most had taken steps to improved office hygiene and cleaning.
The coronavirus outbreak which originated in the Chinese city of Wuhan has spread to more than 110,000 cases around the world, with over 3,800 deaths. There have been more than 300 cases and several deaths in the United Kingdom.
It has sent financial markets into turmoil, sparking fears of a prolonged economic slowdown and prompting an emergency rate cut from the U.S. Federal Reserve last week.
More than half of the business leaders surveyed said that they were quite pessimistic or very pessimistic about the outlook for the economy over the next 12 months.
The IoD called on the government to help businesses by allowing struggling companies to delay tax payments and by extending a government-guaranteed loan scheme.
Britain’s new finance minister, Rishi Sunak, will announce the government’s annual budget on Wednesday.
Sunak and Bank of England Governor Mark Carney have discussed how to respond to the virus, raising speculation about a possible joint move.
(Content and photos syndicated via Reuters)