The COVID-19 pandemic has sent shock waves through the economy. We’ve come out the other side of a countrywide lockdown and are now adjusting to a world guided by one way systems, stripped back offices and social gatherings of no more than six.
Back in April, Beauhurst set out to measure and track the broad impact of the pandemic, as well as individual government restrictions, on the UK’s most innovative and ambitious businesses. These represent the future of the country’s economy, employing millions of people and securing billions of pounds in investment and grants. In their first report in this series, they mapped out the most and least affected sections of the economy. The initial report tracked 28,499 ambitious UK businesses. The latest one tracked 30,025.
In this second edition, Beauhurst have compared their initial findings with the current state of the economy, to see how the situation has progressed over the past six months.
Headline findings
- Just under a third of high-growth businesses are now at risk from the pandemic, down from 53%
- £11.9b worth of equity investment and £738m of grant funding remains at moderate to critical risk, representing 16% and 23% of their respective markets.
- Just 32 high-growth companies have folded as a direct result of the pandemic, with a combined headcount of 1.66k. Meanwhile, 843k employees are at at-risk businesses.
- Although they were initially hit the hardest, companies with large employee counts and a turnover of over £1b are now the most likely to be in recovery.
- Scaleups are one of the most polarised classes of company. 40% remain in an at-risk category, whilst 21% are in the positive impact or positive recovery categories.
- Spinout companies have made substantial progress, with 63% of those in negative impact categories in April now operating under low or positive impact. Just 16% are still at risk.
- London has the highest proportion of positively impacted businesses, followed by the East of England, Northern Ireland and the North West. Scotland is the worst affected area.
- Seed stage companies have agility on their side, but may not have the resources to weather the storm. These are now the least likely to be in a positive impact category.
- Companies operating in traditional sectors have shown improvement, but are still vulnerable. Just under half of leisure and entertainment businesses remain under threat.
Leverage R&D tax credits to promote Innovation
A lot of the companies in this report have adequate prospects for the future, but the first thing that businesses stop in times like these is investment in innovation. However, this is precisely what is needed now if the economy is going to bounce back strongly.
R&D tax credits are an obvious, flexible and direct tool that could be made more attractive and are targeted specifically at innovative businesses. Doubling the benefits for SMEs could have a major impact at a relatively low cost.
If you’re interested in finding out more about the dataset and how you can gain access, please get in touch with Beauhurst at [email protected] or by calling them on 020 7062 0060.
If you’re interested in finding out how MSC R&D can help you optimise your R&D tax credit claim, call us on 0114 230 8401
