The economic recovery has stalled in the East Midlands as tightening Covid-19 restrictions took their toll on businesses, according to new research published today.

An East Midlands Chamber study found cashflow and advanced orders were significantly affected for many firms during the final quarter of 2020 as the second national lockdown in November – straddled by the most severe tiered coronavirus restrictions imposed on the region and the uncertainty leading to the end of the Brexit transition period – undermined resilience to future shocks and the ability to respond to new opportunities.

However, the Quarterly Economic Survey for Q4 2020 showed signs of light at the end of the tunnel as a net 16% of businesses in Derbyshire, Leicestershire and Nottinghamshire said they expected to create jobs in the three months following the study, which was conducted in November – while there were also positive indicators for turnover, profitability and investment intentions.

The restrained confidence for the prospects of 2021 was reflected in the Chamber’s State of the Economy Index, which aggregates the survey data to provide an overall “health score”, as it flatlined following the rebound of Q3.

Chris Hobson (pictured), director of policy and external affairs at East Midlands Chamber, said: “Future pricing intentions started to creep up as increases in raw material costs – along with access difficulties – began to impact on manufacturers. Advanced orders and bookings were down for many as the national lockdown in November caused some to pause their plans and a general sentiment of ‘wait and see’ started to pervade the conversations of some.

“In conversations with businesses, many spoke of a ‘weariness’ and ‘fatigue’ at navigating themselves and their staff through the difficulties of the past 10 months.

“However, there was still an undercurrent of tentative optimism for the coming year, as reflected in the confidence indicators for future turnover and profitability, perhaps acknowledging that the current predicament can’t last forever.

“The economy, as a whole, hasn’t slipped back to the place it was in during May and June, nor has it continued its rebound from that position. Instead, it can best be described as ‘treading water, waiting to see whether the final days of a year that asked more questions than anyone would have anticipated finally delivered some answers.”

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