Measuring the effects of COVID-19 on businesses and the UK economy

Programme:

Topic:

Firms

Summary

Funded by UK Research and Innovation (UKRI), this new work forms a part of ESCoE’s ongoing ‘Developing Firm-Level Micro Data for Productivity Analysis’ project. Aligning with the purpose of this overarching project, producing data on UK firms’ management practices, their expectations and business performance measures; we are gathering timely information on UK business responses to COVID-19 from public sources.

Overview

COVID-19 is creating the largest contraction in UK economic activity in 300 years. The impacts on supply chains and demand are affecting economies across the globe more deeply than experienced in living memory. HM Treasury and the Bank of England launched large-scale programmes to support businesses as a bridge in the short-term to reduce unemployment and bankruptcy. This bridging is ongoing, and further difficult policy decisions will follow. Our ‘COVID-19: Measuring the effects of Covid-19 on businesses and the UK economy’ work is delivering immediate data collection and research analysis about the impact of COVID-19 on businesses of different sizes, sectors and regions, in collaboration with the Bank of England and Office for National Statistics.

When COVID-19 first emerged, our researchers quickly adapted our existing surveys to ask leaders how the pandemic was affecting their business. The real-time information we are producing is critical to decision making about the duration and management of the lockdown arrangements in the UK, and to business performance during the recovery from the pandemic. It will help with the challenge of striking a balance between dealing with the medical and the economic costs of COVID-19. Our assessments of the costs in terms of livelihoods, those of output, investment and jobs, provide policymakers with the data to inform judgements about when to allow the economy to return to normality.

Methods

The project team draws on their experience gained from the Decision Maker Panel (ESRC and Bank of England funded), the Business Impact of Covid Survey (ONS funded) and the Management and Expectations Survey (ESRC and ONS funded). Our researchers are collecting information fortnightly and monthly on COVID-19, with responses from businesses being made available for immediate use for policy decisions in real time by Bank policy committees (MPC and FPC), HM Treasury, BEIS, 10 Downing St and COBRA. A Business Engagement Group including McKinsey, CBI, CMI, Be the Business, and BEIS has assisted with the formulation and cognitive testing of a set of COVID-19 questions that we ask businesses. We updated our Management Expectations Survey (MES), which provides longitudinal and internationally comparable information on firms’ management practices and expectations, with these questions and placed the updated survey in the field in Autumn 2020.

The survey data is being archived, offering a matched dataset using administrative data and ONS surveys to provide detailed analysis of the immediate impact of COVID-19 on employment, investment and sales growth. We are documenting the ability of better, and worse, managed firms to respond to shocks, evaluating the impact on businesses over an 18 month period with regards to business performance (productivity), use of debt, digital technology, working practices, and supply chains.