Manchester economy poised for a long road to recovery before pandemic despite business optimism

Manchester’s economy will not return to the level it was before the Covid-19 pandemic until at least 2025, the chamber of commerce has said.

This is despite the organization’s quarterly economic survey which found the Greater Manchester business community to be optimistic about the recovery.

The Greater Manchester Chamber of Commerce said the success of the vaccination program and expectations of ending Covid-19 restrictions contributed “to some cautious optimism” among the 300 business owners who attended.

The survey saw the Greater Manchester Index move into positive territory for the first time since April 2020, with all three industry groups – services, manufacturing and construction – showing signs of recovery.

The index now sits at 6.1, an increase of 24 points from the previous quarter’s results.

However, Subrahmaniam Krishnan-Harihara, head of research at the Greater Manchester Chamber of Commerce, told BusinessLive that the city region‘s economy will not return to pre-pandemic levels until between 2025 and 2026.

He added that while there will be improvement in the remaining nine months of 2021, the region needs more time to regain lost ground.

Mr Krishnan-Harihara said: “It will be a relief to the business community and political leaders in Greater Manchester that a sense of optimism returns after the historic economic collapse of 2020.

“After a long period of Covid-19 restrictions, the Greater Manchester business community appears to be supported by the Prime Minister’s roadmap to emerge from the lockdown and the extension of Covid-19 support measures that the Chancellor has announced in the spring budget.

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“That, of course, does not mean that we are out of the woods yet. The service sector, which includes the worst affected sectors of retail, hospitality and leisure, is still suffering and the recovery of Covid- 19 is going to be slow and difficult.

“The survey results also showed that cash positions are still negative for all three industry groups, meaning more companies reported a reduction rather than an improvement.

“Capacity utilization also remains low with just 28% of companies saying they are operating near full capacity.

“Without a substantial improvement in customer demand, companies will not be able to increase their revenues, cash reserves and operational capacity.

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“Nonetheless, business confidence has improved considerably since December 2020.

“The onus is now on the government to build on the current improvement and optimism by providing absolute clarity on its road map out of lockdown so that businesses, especially those in the most affected sectors, can buy new ones. actions or make plans on how they will work.

“The roots of recovery that we see now are too precious to waste.”

Driven by activity in the construction industry, current sales and anticipated orders from domestic customers increased from the fourth quarter of 2020, but the chamber said there was “a clear divergence emerging” in the performance of different sectors.

While almost half of respondents in the construction sector reported improved sales, less than a third of companies in the manufacturing and services sector said their sales to UK customers increased in this quarter.

In contrast, a third of respondents in the manufacturing sector and 40% of respondents in the service sector reported a decline in sales during this quarter.

Service sectors account for well over 80% of the urban region’s economy, which means that a further recovery is needed in services for the overall economy to start growing again.

The Greater Manchester Chamber is the largest such organization in the UK and its roots date back to 1794.

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