How Are Businesses Coping with the UK’s Third National Lockdown?

After a bleak ten months of social distancing and intermittent lockdowns, UK businesses hoped that the New Year would also bring new opportunities to restart and rebuild. Unfortunately that wasn’t to be the case, with a third national lockdown coming into effect on Tuesday 5 January 2021.

There’s no denying that businesses have been struggling across the country, but some industries – for example hospitality and retail – have been struggling more than others. Restrictions won’t ease entirely until 21 June, but at least we now have a roadmap designed to lead us out of the pandemic.

In this article, we examine how UK businesses have been coping with the third national lockdown, and what the next few months of restrictions could mean for the economy.

The Winners and Losers of the Third National Lockdown

The third national lockdown began in January. By the time the last restrictions (hopefully) end in June, the nation will have been locked down for a long six months. For the first half of the lockdown, the vast majority of businesses have been badly affected by restrictions. However certain industries have continued to operate despite the lockdown, while some sectors of the economy have even been thriving!

It’s safe to say that it’s not been an equal lockdown. Some people have been more in it than others. The lockdown losers are businesses that haven’t been able to successfully pivot to cope with continued restrictions. These primarily involve non-essential businesses that need to operate face-to-face, and businesses that work in hard-hit sectors such as hospitality, tourism, leisure and high street retail.

The winners of the third lockdown are those businesses that have a large online presence –corporations like Amazon – and essential businesses, such as supermarkets. In general though the economy has dipped again, and a remarkable number of companies have become insolvent, signalling that business as a whole is certainly not business as usual.

How Have Businesses Been Coping With The Lockdown?

The extent of the damage caused by the lockdown depends on how well a business has been able to cope with lockdown restrictions. For some, there has been no choice but to close up shop; many businesses have even been forced to close permanently.

For many more, they have been forced to pivot into new markets or find new ways to sell and deliver their products. The switch to online marketplaces has been accelerated (as it has since the first lockdown, a year ago) while many companies have continued to work remotely.

Let’s take a look at the positive steps businesses have been taking in order to cope with restrictions.

Remote Working

Restrictions have made it impossible to work in a traditional office environment, which has led to an exponential rise in remote working across the country. Office workers have taken their laptops home and are successfully conducting business remotely.

This has been possible for a vast number of companies in multiple sectors, from charity workers to accountants. To cope with the new demands, companies have been investing in digital software and hardware for their employees. This includes teleconferencing software such as Zoom, alongside cloud technology and databases.

Focusing Online

Businesses have been able to cope by taking things online. In most cases however, businesses that are able to operate online (as opposed to face-to-face) will have already made this move last year, during previous lockdowns.

For retail, this means taking online orders and operating delivery or collection services. For restaurants, there has been a switch to online orders, particularly through apps such as Deliveroo or Just Eat. Tour operators have even tried to take their products online (with limited success) offering locked down travellers the opportunity to remotely travel to distant cities.


Not all companies are able to operate remotely or have the ability to successfully run businesses online. For companies that have seen a huge downturn in profits or for shops and businesses that have had to close completely, the government’s furlough scheme has been a successful coping mechanism, at least in the short term.

The furlough scheme allows a business to effectively wind down operations while in lockdown. Rather than letting staff go, the government pays 80 per cent of their wages (up to a cap of £2,500 per month). The scheme has been said to have saved thousands of jobs, but it’s unclear what will happen to those jobs when furlough payments end in September.

Grants and Government-Backed Loans

In addition to the furlough scheme, government grants and government-backed loans have also been helping businesses cope with the third national lockdown.

Self-employed workers have been able to take advantage of the Self Employment Income Support Scheme. This grant offers the self-employed up to 80 per cent of their monthly profits (up to a cap of £2,500 per month) if their business has fallen due to the pandemic.

There are other grants on offer to retail, hospitality, leisure, and other service-based businesses that have suffered due to restrictions, while government-backed loans (including Bounce Back Loans and Coronavirus Business Interruption Loans) have provided low interest, easy-to-secure finance for struggling businesses.

The Roadmap out of Lockdown

Different parts of the economy are scheduled to open up sooner than others. Hairdressers and gyms can open on 12 April, but restaurants can’t seat people indoors until 17 May. It’s hoped that by 21 June almost all restrictions on businesses will have been lifted. By this date, even nightclubs are hoping to reopen.

Until that date, businesses will need to continue making use of government loans, grants and schemes for continued financial support if they are unable to pivot, work remotely, or make the switch to online markets.  

Contact Irwin Insolvency for Your Free Consultation

With decades of experience dealing with insolvency matters, our licensed insolvency practitioners can offer impartial advice to help your business through these tough times. If your business is struggling financially, then don’t hesitate to contact Irwin Insolvency today for your free, no-obligation consultation.

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About the author

Gerald Irwin

Gerald Irwin is founder and director of Sutton Coldfield-based licensed insolvency practitioners and business advisers, Irwin Insolvency. He specialises in corporate recovery, insolvency,
 rescue and turnaround.