Each week thousands of job cuts are announced in some of Britain’s biggest retailers. This morning, Marks & Spencers announced it planned to cut 7,000 jobs over the next three months. Debenhams has also announced it plans to cut jobs, some 14,000, after a report suggested the shop’s owners were drawing up plans for its liquidation as a result of an intense dip in sales.
Another, WH Smith, is considering cutting 1,500 jobs – a hefty 11 percent of its workforce – after sales plummeted because of lockdown.
The scene is similar for many retailers with the exception of supermarkets, many of which experienced a surge in sales largely down to panic buying in the run-up to lockdown.
Chancellor Rishi Sunak last week announced that the UK had officially entered a recession.
It came as reports showed that the country’s economy shrank 20.4 percent compared with the first three months of the year.
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Many economists and experts have now rushed to attempt to predict what the UK’s economy – and everything in-between – will look like in a year’s time.
According to Natasha Bernal, business editor of Wired Magazine, “the deepest recession in living memory” is here.
“When lockdown ends,” she explained in an article earlier this year, “the high street will be decimated, and household names will have vanished.”
Her prediction appears to be nearing realisation.
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The coronavirus pandemic, according to Ms Bernal, may have already “permanently erased” Britain’s business landscape as “some 21,000 more UK businesses collapsed in March alone than the same month a year ago”.
She said that over the next 12 months, projections look like one of the following three letters: “V (a swift recovery), U (a dip, followed by flat growth, then recovery) or L (the rather ominous dip, flat growth and no foreseeable recovery).”
According to Ms Bernal, in 12 months’ time, global supply chains that retailers, manufacturers and tech behemoths rely on will be recast.
This, she argued, will speed up “the shift that started with Brexit and the US-China trade war”.
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Meanwhile, Patrick Minford, Professor of Economics at Cardiff University, wrote in the Daily Telegraph last month struck a lighter note.
He argued: “There will be much less change than current fashion would have you believe.”
Instead, the high street might in fact bounce back, with retailers enjoying the easing of lockdown, with June’s retail sales figures from the British Retail Consortium revealing how, actually, all have recovered their losses to show 3.4 percent growth in June a year ago.
As Prof Minford noted: “That is remarkably V-shaped, after the precipitous drop under lockdown.”
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Retail sales rose again in July, but shops continued to make up for ground that was lost during the lockdown.
However, many, including Mark Hart, deputy director of the Enterprise Research Centre, have argued that any initial resurgence may not last.
He told Ms Bernal that the economy will likely take the form of a “pincer movement” of higher business closures and a lack of new businesses taking their place.
He said: “In that context, rather than seeing a V-shaped rebound as some economists have predicted, we could instead see an L-shape dragged down by a net loss of companies over a long period.
Rishi Sunak: The chancellor announced earlier this month that the UK was officially in recession
“The insolvencies are stacking up. And I believe the private sector is going to lose a few million jobs between now and autumn.”
Yet, many have argued that home working and long-term office closures could in fact revive the high street.
Last month, the Royal Institution of Chartered Surveyors’ latest commercial property survey found almost all members – 93 percent – saw businesses scaling back their office space in the next two years.
It said a move away from urban hubs could prompt a shift to neighbourhoods.