Government grants covered less than a quarter of overheads faced by businesses forced to close by coronavirus restrictions, according to the findings of a new survey.

Research by Business West found the level of financial support for businesses required to close by law during the November lockdown was grossly inadequate.

Of the businesses forced to close across the South West last month, including restaurants, cafes and non-essential retailers, 54 per cent said government financial support failed to cover a quarter of their most basic costs.

One Gloucestershire publican, who wishes to remain anonymous, said: "£1,334 of government grants will never cover any businesses fixed costs for one week, let alone a month. The grant covers maybe 10 per cent of my fixed costs."

There was a further damning assessment from respondents reliant upon on the high-street and hospitality industry remaining open.

A Bath-based food and drinks supplier said: "I have a small retail premises with an off sales license. I get no support, but due to the closure of hospitality my business has disappeared.

And one events business said it had seen sales plummet 70 per cent as the businesses it supports had been required to close, but it was not eligible for support.

Business West managing director Phil Smith said: "With lockdown followed by the imposition of Tier 2 and Tier 3 restrictions across our region, the financial support from grants to closed or badly hit businesses is currently far less generous than earlier on in the pandemic.

"Government may think these businesses are well catered for, but our polling shows that many are hurting badly.

"As mass vaccinations get underway, now is not the time to skimp on support for local businesses unable to operate normally. If we are a matter of months away from businesses being able to return something approaching normality, why undo all the hard work now?"

He continued: "While the extension of furlough until the end of March is welcomed, a few more months of comprehensive financial support for businesses hit hardest by the pandemic pales in comparison to the billions already spent by government this year.

"Clearly there is a need for government to balance its books and 2021 will undoubtedly see some tough choices being made.

"With an effective vaccine finally in our grasp, government needs to heed its own general message to the public and hang on in there just a little while longer and continue to support businesses into the spring."

The quarterly survey of 497 businesses from November 5-27 also revealed:

• More than one third of businesses across the region cut investment in new plant, research and development, staff training and expansion into new commercial property in the three months to November.
• Half of businesses reported a decline in cashflows from the previous quarter.
• More than 70 per cent of businesses are operating below capacity.
• A worrying 41 per cent expect profitability to drop over the course of the next 12 months, compared to 32 per cent who expect an improvement.

Mr Smith said: "The trends are clear - the second national lockdown has deepened the business community's declining confidence in the economy overall and in their business performance.

"Weak demand and the general economic uncertainty present an extremely difficult environment for businesses to operate and prosper.

"The economic expectations of the UK economy for the next 12 months are negative for a majority (60 per cent) of businesses, with only 15 per cent report being confident. These numbers are in line with the expectations published last quarter."

He continued: "Looking forward to 2021, businesses will look to government, both local and national, to deliver a more stable, predictable and commerce friendly environment to support economic recovery.

"Many businesses will be looking forward to the end of the year hoping 2021 brings a more hospitable outlook."