Almost half of all UK businesses have either stopped investing or cut back capital spending since coronavirus struck as they preserve cash, according to the Office for National Statistics.
Its latest weekly set of economic indicators showed that Britain is slowly getting back to normal, with more people returning to the workplace and advertised job vacancies increasing. New information on investment, however, provided more evidence of the economic toll of the outbreak.
Of the 5,100 responses to its business survey, 19.8 per cent said that capital expenditure had stopped and another 23.2 per cent said it was below normal. Business investment is considered key to future productivity.
Although some paused investment will be made up later, the capital stock of the country will be lower than it would have been, with some lasting hit to GDP, as the Bank of England has suggested.
The survey also found that 79 per cent of companies were using the furlough scheme and, of those, 41 per cent were providing wage top-ups for staff. A total of 14 per cent of companies were temporarily closed and 44 per cent said that they had less than six months of cash reserves before going bust.
However, the survey showed activity was picking up as restrictions are eased. A household survey the ONS runs showed 44 per cent of working adults had travelled to work in the past week, up from 41 per cent the week before.
The findings were echoed in the business survey, which revealed that 2 per cent of the workforce in those businesses that are continuing to trade had returned from remote working in the past two weeks and 7 per cent of the total workforce were back from furlough.
The government’s furlough scheme has been helping to pay the wages of 9.2 million people, at a cost of £22.9 billion so far. A total of 3.3 million universal credit claims have been made since the start of March, the ONS added. Not all of those will have been employment related because the benefit includes a variety of support.