Analysis: What now for the Scottish economy?
While thousands more businesses found themselves under increased coronavirus restrictions, a raft of economic reports brought further doom and gloom.
The Scottish Retail Consortium’s news that one in seven shops in Scotland are currently lying empty – the highest proportion in five years - in what the business group eloquently describes as “a vivid reminder of the consequences of the tumult of the past eight months”. Many of them were closed during the most stringent period of lockdown, between March and June – and never re-opened. Retail businesses lost cumulative shop sales of £2.4 billion with shopping centres particularly hard-hit due to their exposure to fashion and restaurant operators, as well as having less ‘essential retailing’ to help retain footfall.
Retail parks have the most vacancies, the report found – ahead of shopping centres and high street locations - however, experts believe there could be some reprieve for this type of shopping area due to the large size of the units – leading to easier social distancing and plenty of space for parking.
Meanwhile, the businesses themselves are far from optimistic. One UK Government report published today found that 47 per cent of companies say their turnover is lower than it should be at this time of year, while the Federation of Small Business Scotland warned that a quarter of Scottish companies believe that conditions over the coming three months will be much worse. The government report however, did point to the fact that the number of jobs advertised is on the increase – up this week to 70 per cent of usual levels on the Adzuna website - the highest recorded level since 27 March.
The one bright spot in an otherwise gloomy situation is that this is an economic crisis generated by necessity. It is not due to gaping holes on banks’ balance sheets, nor is it because consumer demand has dipped. Once it is safe to do so, many consumers will want to go back to spending as soon as they can. Some workers who have kept jobs throughout the pandemic will actually have more disposable income burning a hole in their pockets once the world is fully opened up again. This, however, will be tempered by the many thousands of people who have lost jobs or suffered a major cut in income.
There is no doubt that there are tough times ahead. The exact duration of the coronavirus pandemic is still unknown and many businesses are currently wrestling with the question as to whether they can afford to hang on in their current form until the crisis comes to an end, in whatever form that may take. For many, the answer will be no.
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