HomeCommentaryThe impact of EU Transition and COVID-19 on North East businesses

The impact of EU Transition and COVID-19 on North East businesses

In conversation with Emma Ward, Research and Evaluation Manager at the North East LEP, about the impact of EU Transition and COVID-19 on North East businesses.

Categories: COVID-19/ Businesses
Published by Emma Ward on 04/05/2021

Why is surveying and gathering data about the North East business community so important, particularly during significant periods of change? 

The North East Local Enterprise Partnership is a data driven, evidence-led organisation; it’s at the heart of what we do. Intelligence gathering and surveying the business community in the region is an essential part of our role.

During periods of change - like we’ve seen with the coronavirus pandemic and EU Transition - it’s important for us to know, first hand, the potential impact, challenges and opportunities it could create for the business community. We also need to be prepared for any potential economic shocks too.

In the past 18 months we’ve done a lot of intelligence gathering because the LEP, along with our Local Authority partners, have been feeding back to government on a weekly basis to provide an up-to-date picture of the risks, concerns and growth opportunities in the region.

In doing so we’re making sure the region’s voice is heard. The feedback we’re providing not only informs our immediate response, but it also helps us create a recovery plan for the future too.

 

What has the data told us about North East businesses’ preparedness for the EU Transition? 

What it’s shown is that businesses have prepared in different ways. Those organisations more exposed to the changes brought about by the EU Transition were more likely to have taken early action, be that mapping supply chains, understanding where their data is housed, or reviewing where their employees come from. They tended to be larger businesses with a more global presence.

What we’re seeing now after the transitional period is that smaller businesses who import and export goods and services are experiencing problems with supply chain distribution, logistics, and delays at customs etc. They’re struggling to navigate the new customs arrangements around areas like rules of origin and completing the necessary paperwork. There are also some areas that need additional clarity and that’s left businesses unsure about what they need to do.

Businesses have really struggled to detangle the impact of COVID-19 and EU Transition; they’re so intertwined. The biggest immediate challenge for most businesses has been the coronavirus pandemic. As we move out of lockdown, we may see more clearly what the impact of EU Transition has been. Right now, lots of businesses find it hard to pinpoint which is creating the biggest challenge.

 

Which sectors have been the most affected by EU Transition?

With this particular bit of research we focused on sectors that were most likely to be impacted by EU Transition, and they tended to be the ones that imported and exported goods or services. 

Businesses in the agriculture, food and drink, wholesale and retail trade, and manufacturing sectors all saw disruption. Nearly half of the businesses we surveyed operating in wholesale and retail trade had to make adjustments because of EU transitions, followed by 39% of manufacturing businesses.

What does the data tell us about the continuing impact of the coronavirus pandemic on the North East business community?

What’s really interesting is that the majority of businesses are now telling us they’ve been able to continue trading during the pandemic, which certainly wasn’t looking the case in March 2020.

Whilst businesses have been able to continue trading, there have been challenges. Many have had to operate at reduced capacity, or change their working practices to an online model.

80% of businesses told us they had seen a seen a change in demand for their goods or services in the past year. Many businesses are now worried about stimulating future demand, and doing it in a safe way that helps improve customer confidence.

 

Despite the challenges of COVID-19 and EU Transition, does the data highlight any positive changes within the North East businesses?

What’s really interesting is how many businesses have digitised, be it the overall business offer, or changing face-to-face delivery to online, for example. Many have invested heavily in social media, or upgraded their IT equipment. 

Businesses have also changed how they operate, with many introducing flexible working and moving to digital platforms like Microsoft teams to enable integrated online working.

The North East business community has shown great resilience and agility. As we move out of lockdown, it will be interesting to see if those trends continue.

Another real positive has been the increase of resilience planning. Businesses have focused a lot on safety at work, looking at how they can create safe environments for both employees and customers.

The publication of government’s roadmap out of lockdown has definitely increased business confidence. There is still some nervousness about the impact the end of the furlough scheme will have, and some businesses are managing loan repayments, but on the whole, there is more optimism and positivity about the future.

 

The North East Growth Hub Monthly Survey

For the past month, the North East Growth Hub has been gathering intelligence on Covid-19 and EU transition through telephone and online questionnaires. Find out more below.

Download the survey