The Economic Impact of the COVID-19 Pandemic on Ceredigion Businesses and Self-employed

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This study aims to investigate and understand the economic impact of the COVID-19 pandemic on businesses and the self-employed within Ceredigion. Ceredigion is a rural County with key industry sectors such as agriculture, hospitality, tourism, retail, construction, manufacturing, civil service, health and social care, creative arts/ entertainment, transport, telecommunication, and education (including higher education). In addition, non-governmental organisations and charities have a major presence in the county. One of the main differentiating characteristics of Ceredigion is its large share of self-employed businesses (13.5% in 2022) and small and micro enterprises (91.8% in 2022).

On the 23rd of March 2020, the United Kingdom government introduced various restrictions in order to contain the spread of the COVID-19 virus. These restrictions included the closure of places of work and worship, shops, businesses, leisure centres, sports events, hotels and restaurants, pubs, nightclubs, libraries, museums, schools, and universities. Non-essential activities (see Appendix 1), non-essential travel, and tourist activities were temporarily suspended. The containment measures, restrictions and subsequent lockdowns had a negative impact on the economy which resulted in direct costs to businesses and the self-employed, affecting revenue and proftability, supply chains and operations, and human capital. The impacts on business operations included: the closure of business premises, reduced working hours due to employees working around childcare or other caring responsibilities or the necessity of employees working from home during the lockdowns (ONS, 2020a). At the start of the closures and lockdowns, the future of the economy looked pessimistic and the economic situation in the country was expected to worsen (ONS, 2020a).

In this study, we specifically investigated the economic impact of the COVID-19 pandemic on businesses and the self-employed within Ceredigion. With lockdowns shutting down most economic activities across the world and the UK, there is no doubt that these measures had a negative impact on businesses. The adverse impact of business closures and lockdowns was more pronounced in rural economies such as Ceredigion (Mahmud and Riley, 2021, Walmsley et al., 2020). This motivated a local level study to evaluate the impact of the pandemic, highlighting multi-level business vulnerabilities resulting from the interplay of local factors such as the local economy’s sectoral composition, transmission patterns, and business types.

The main objective of this research project is to examine the evidence and understand the economic impact of the COVID-19 pandemic and the lockdowns on businesses and the self-employed in Ceredigion. The study seeks to identify both the negative and positive developments that occurred and how these might help inform future policymaking. The insights from this research will be useful to policymakers to provide appropriate measures to support the recovery of businesses. It is expected that this report will be of value to the businesses and the self-employed that operate within the county and other similar counties across the UK.

This study is based on the survey of businesses and the self-employed in Ceredigion and informed by a review of related academic literature and other studies carried out by government agencies and non-governmental organisations on the impact of the COVID-19 pandemic in the United Kingdom and other countries in the world.

This research project explores how Ceredigion businesses and the self-employed coped during the COVID-19 pandemic. Ceredigion businesses and the self-employed have reported on their level of profitability and revenue, supply chain and operational issues, human 5 capital, government support schemes, digital connectivity issues, and confidence in the future. These responses are explored in the main body of the report.

We received a total of forty responses from businesses and thirty-seven self-employed businesses located in Ceredigion. The responses came through the online version of the survey, which was hosted on both the Ceredigion County Council and Aberystwyth University websites and other social media outlets. During the pandemic, the online platform was the quickest and safest way of reaching businesses and the self-employed hence our decision to conduct an online survey.

A summary of the range of businesses surveyed shows that: 10.5% of the businesses had only been operational in the year prior to the March 2020 lockdown, 60.5% of businesses had been operational since 2000, and 39.5% of businesses had been established prior to the year 2000. 47% of the business respondents were limited liability companies. 62% of businesses surveyed were run as sole proprietorships. The respondents were from a wide range of industrial sectors. The largest proportion was 32% in hospitality, tourism, and the leisure sector, followed by 17% in retail, 12% in building and construction, 7% in manufacturing and transportation, 5% in childcare, 5% in IT, 3% each in financial services, education and agriculture, and 2% each in healthcare, legal, and the media industry.

Our findings show significant changes in business revenue, levels of external debt, changes in demand and customer numbers and disruptions to supply chains since the onset of the COVID-19 pandemic. Changing operations to comply with government restrictions e.g., social distancing, increased sanitisation and cleaning and staff with caring responsibilities working from home considerably changed the business environment. In addition, the necessity to operate online led to a marked increase in businesses having to provide computing devices, internet connectivity and digital accessibility for their operations.

The impact of COVID-19 on the revenue of businesses surveyed was negative for over two thirds of the sample. 69% saw a fall in revenue compared to 10.5% which saw a rise during 2. The self-employed businesses were surveyed in the socio-economic impact of the COVID-19 pandemic on Ceredigion households survey, their responses are included in this report only. the pandemic. The level of external debt rose in 33% of businesses with 54% of businesses reporting that finances fluctuated during the pandemic. 92% of businesses reported that they had experienced difficulties in various areas of their business. The difficulties were: supply chain disruptions, a reduction in the number of customers, a decline in cash flow, an increase in the number of business debtors, staffing issues, family circumstances, access to local markets, and accessibility problems due to safe zones in towns.

Focusing on the self-employed respondents to the survey, 46% reported that business customers had declined due to COVID-19 restrictions and 43% of self-employed businesses reported that business revenue had declined due to reduced demand for the products and services they supplied, compared to 8% that reported a rise in business revenue due to increased demand for their products and services.

The outbreak of COVID-19 led to significant disruptions to the supply chain of businesses in Ceredigion. 45% of businesses surveyed reported varying degrees of disruptions to their supply chains. 5% of the self-employed respondents were directly affected by shortages of supplies needed to run their businesses. The impact on supply chains and temporary closures of businesses meant that many businesses had to adopt new ways of working and adapt to the needs of customers in a very short period of time.

Among the businesses surveyed, 76% had to change the way they operated due to the introduction of new health and safety measures. These included operating at reduced capacity to allow for social distancing, frequent disinfecting and cleaning of customer areas, adapting the business to provide a takeaway service only, moving the business online, altering shift patterns for workers, and moving meetings online as some employees continued to work from home. 47% of businesses surveyed reported issues with digital access and connectivity which included slow broadband speed, poor mobile signal, lack of digital skills and the cost of digital access. Moving whole or part of the business online relies on good infrastructure and digital connectivity. 6 3% of the businesses surveyed were impacted by COVID-19 and had to close their business permanently and 69% had to close their business temporarily. After the initial shutdown and closure of businesses the majority were able to function in some capacity. 95% of businesses in Ceredigion did not close permanently. 3% of self-employed closed permanently while 35% closed temporarily. The self-employed that closed temporarily included those in hospitality, creative arts, photo artist, retail, business services, shopkeeping, photography, hairdressing, general therapy, and property maintenance.

The pandemic had an adverse effect on human capital which led to redundancies, reduced working hours and changes in work patterns. 13% of businesses reported laying off staff due to the pandemic. 41% of businesses reduced their employees’ working hours, and 32% had staff working from home. 34% of employees across all businesses surveyed were caring for children during the pandemic. Employees were also self-isolating or on sick leave and in receipt of company paid sick leave or Statutory Sick Pay because of the pandemic. These redundancies, changes to work patterns and staff shortages due to illness or self-isolation had an indirect negative impact on the businesses surveyed.

The government introduced a range of support schemes in order to help businesses and the self-employed. Among all the government support schemes, the Coronavirus Job Retention Scheme (Furlough) to help retain employees during the pandemic and the Self-Employed Income Support Scheme (SEISS) to support the self-employed were the most utilised. From the responses, other schemes applied for included: Welsh government grants, Recovery loans, Business rates grants scheme, Business support grants, Non-domestic rates business grant, Local Authority discretionary grants, Small business grant, Start-up business COVID grant, Coronavirus Business Interruption Loan Scheme (CBILS), Bounce Back Loan Scheme (BBLS), Government backed loans and the Economic Resilience Fund.

In Ceredigion, 59% of businesses surveyed registered for the government Furlough. Sole traders and self-employed businesses were not eligible for the scheme. Also, those businesses that did not have any employees or had not been trading long enough were not eligible. Some businesses continued trading throughout the pandemic and maintained their pre-pandemic staffing levels without the support of Furlough. These included businesses which had staff working from home and those where sales continued, albeit lower than in previous years or saw sales increase due to the introduction of new business lines.

Unlike the Furlough Scheme which was implemented more expediently, the SEISS scheme was implemented two months later. The delay in setting up the scheme contributed to the financial hardship for small businesses and the eligibility criteria left out several categories of the self-employed. 27% of self-employed businesses applied for the Government’s SEISS. 22% of the self-employed surveyed were eligible and successful in their application for any government self-employment business support schemes. 76% of the self-employed respondents reported that they were not eligible for any of the government’s self-employment business support schemes. These figures suggest that the eligibility criteria ruled out some of the self-employed from participating in these schemes.

The containment measures put in place were successful in reducing the spread of the COVID-19 virus and lessened the burden on the NHS. Also, the government business support schemes helped to alleviate some of the adverse effects of the pandemic. However, businesses and the self-employed suffered because of the containment measures despite the government’s support. For example, the shutting down of economic activities during the pandemic meant that revenues and profits were negatively affected by reduced demand and the closure of businesses. Some businesses had to take on additional debt in order to survive. Also, lockdowns and other COVID-19 containment measures had a direct negative impact on business operations and supply chains. Staff were made redundant, some worked from home, self-isolated due to infection, took paid or unpaid sick leave, undertook homeschooling or other caring responsibilities. All these impacted negatively on businesses through changes in working hours, work patterns and employee responsibilities. The Furlough Scheme and Self-Employed Income Support Scheme helped to retain staff and to support the self-employed. However, there were delays in the implementation of the SEISS and several categories of the self-employed were excluded from the scheme based on eligibility criteria.

Finally, as with any survey-based data collection method, caution needs to be exercised in reading and interpreting the results of this study. Businesses and the self-employed that were impacted most by the pandemic might have been preoccupied with their predicament and were not motivated to participate in the survey. That means that some of the worst impacts of the pandemic on the businesses in Ceredigion may not have been reflected in our results. Using alternative data collection methods such as focus groups was not possible due to COVID-19 pandemic restrictions.
Translated title of the contributionEffaith Economaidd Pandemig COVID-19 ar Fusnesau a Phobl Hunangyfl ogedig yng Ngheredigion
Original languageEnglish
PublisherPrifysgol Aberystwyth | Aberystwyth University
Number of pages56
Publication statusPublished - 19 Sept 2023


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