The spread of coronavirus – and its economic impact – has triggered a collapse in British business confidence, according to the Institute of Directors (IoD).
More than 300 cases of COVID-19 have been confirmed in the UK, with five lives now lost to the virus.
Experts have warned of a likely ‘significant’ level of infection across the nation, while other countries – notably Italy, Iran and South Korea in addition to China – have experienced major outbreaks too.
All of this has led to a substantial downturn in business confidence, both at home and abroad,
The IoD says confidence is at its lowest ebb since September, when the UK was shrouded in uncertainty due to Brexit and the upcoming general election.
A survey from IoD revealed one in five of its members cite coronavirus as a ‘high or severe threat’ to their organisation, with a further 40% recognising moderate risk.
One in three directors polled has already cancelled or restricted employee travel, while a majority are enhancing office hygiene. Four in ten have encouraged remote working.
Tej Parikh, Chief Economist at the IoD, said: “The coronavirus outbreak poses a significant challenge for the business community, and it is vital that the government continues providing timely and accurate guidance.
“The UK’s directors are nothing if not resilient. Businesses large and small are already responding with agility, with many already taking sensible mitigating actions at this stage.
“However, 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.
“Government must be at the ready to take swift action to help cash-strapped businesses bridge this challenging period. The upcoming Budget also provides an opportune moment to lower business costs and support investment to amplify the post-outbreak recovery.”
The IoD urged Whitehall to ‘keep all options on the table’ to help organisations facing potential cashflow challenges.
It suggested enabling companies under financial distress to spread tax payments over a longer timetable without penalty, encouraging support from banks, insurers and larger firms, and extending government loans to struggling firms.
However, businesses are being urged to accept disruption is inevitable and plan accordingly to minimise the impact on their prosperity.
Rupert Morrison, economist and CEO of workforce strategist orgvue, said: “Plummeting stock prices are very worrying for global markets, but the biggest risk to the UK economy right now is the contagion of fear.
“If business leaders approach this outbreak from a position of fear they’ll find themselves unable to take decisive action.
“It’s tempting to wait and see, but it’s time we accept that it’s no longer ‘business as usual’. Businesses should be planning and preparing their organisations for whatever happens next.
“The key questions businesses need to ask are: what work in our organisation is mission-critical? What can be postponed or stopped entirely?
“If businesses can identify activities that aren’t an immediate priority they can be moved around to reduce pressure on the organisation in the wake of absences. Equally, people and resources can be diverted toward mission-critical work and projects.
“It’s those businesses that are prepared, actively planning and replanning around different scenarios that will be able to move ahead with confidence and ride out the storm.”