Business Investment in UK Telecoms Sees Sharp Fall in Q3 2020

A new study by tax relief consultancy Catax, which analysed the latest data from the Office of National Statistics (ONS), has reported that business investment in the UK telecoms sector has fallen for a fifth consecutive quarter and plummeted by 9.2% in Q3 2020 alone.

Business investment in the industry declined £355m between Q2 and Q3 2020, sinking to £3.5bn as the global pandemic continued to hamper economic activity. This represents a 41.8% (£2.5bn) year-on-year fall from just over £6bn in Q3 2019, which is said to be significantly worse than the performance of UK industry as a whole.

By comparison, total UK business investment across all sectors recorded an annual fall of 19.2% in Q3 last year. However, quarterly UK GDP grew by 15.5% in Q3, although this pace of growth did slow later in the year, with only a 1% rise recorded for Q4. The result was that over 2020 as a whole, UK GDP shrank by 9.9% – the worst performance since modern records began.

Mark Tighe, CEO of Catax, told ISPreview.co.uk:

“The telecoms sector is really labouring under the problems created by the pandemic, which would have forced many firms onto the back foot as they looked to weather the storm and preserve cash flow.

The industry is underperforming the wider UK economy, and other sectors have shown a far stronger rebound in the third quarter of last year, so it has much ground to make up.

Having been tipped into this stubborn decline by the pandemic, it has to be assumed that things are unlikely to improve while the country continues to see repeated lockdowns. However, the current vaccine drive should allow the UK to throw off its Covid shackles soon and this will hopefully provide telecoms, information and communications firms with the opportunity to mount a recovery.”

We’ll be watching closely to see how things change during the course of 2021 as the vaccine rollout grows in the UK, although it’s worth considering that nasty mutations in COVID-19 still have the potential to disrupt all of this and so too does any potential mismanagement of the pandemic by the UK and other world Government’s. Equally it’ll probably be Q3 or Q4 2021 before we start to see the result of a positive outcome.