I’m writing this from my home in Melbourne where we are three weeks into a second wave of lockdown. We have all scrambled to adjust once again, and around the world there are similar patterns emerging as we start to see the shape this pandemic is going to take. World governments are tweaking their policy settings, and extending or scaling back stimulus packages. I heard someone say that forecasting what’s going to happen next is “like holding up your finger in a hurricane”.
At this time, evidence based information is crucial to make informed decisions and it’s vital to call out the specific impact on the small business sector. Under our Xero Small Business Insights (SBI) program, we are publishing monthly metrics showing the impact of COVID-19 based on anonymised, aggregated data drawn from hundreds of thousands of our subscribers.
Xero has been using data to brief government leaders and policy makers in Australia, New Zealand and the UK as they wrestle with this crisis. We are releasing our June data and providing comparative information across these countries. We believe there are interesting lessons to be learned from the varying responses to timings of lockdowns and the structure of their wage subsidy programs.
While we work to provide the cold hard facts, we never forget that behind the data are hundreds of human stories, of small business owners, the people that work for them and their customers who are being buffeted from every side.
As you can see from our graph below, each country has made different responses and are seeing varying signs of recovery. Our intention is not to call out whether one location appears to have been more successful than any other but rather to point to apparent success factors which all can draw on. It appears that harder lockdowns resulted in large initial impacts on revenue, but the subsequent positive health impacts have allowed economies to start the recovery process more quickly. There is also evidence that the broader the wage subsidy program, the less the impact on employment.
Some of the key findings of the June data are as follows:
New Zealand has experienced the strongest early rebuilding phase of the three countries so far, despite having the largest drop in revenue when lockdowns were introduced.
Australia was less hard hit on revenue losses (down 10% at the trough), but has suffered the greatest loss of jobs (down 12% at the trough), including large numbers of casual workers in late March.
The United Kingdom started to ease restrictions later than the other two countries, and is yet to hit the trough in employment outcomes, but had some modest improvement in revenue in June to still be 18% below year ago levels.
Sector recovery: across all three countries the hospitality and arts & recreation sectors have been the hardest hit. In June manufacturing was the best performing sector in all three countries.
At the start of this pandemic, even though so much was unknown, what we did know was that COVID-19 would deeply affect small businesses, as well as our accounting and bookkeeping partners. With Xero SBI, our aim is to give a voice to our customers to show how they are being affected and to ensure they are being prioritised in the policy responses to support recovery.