Scotland’s economy facing 'winter of risk' - Scottish Chambers of Commerce warning

Scotland’s economy faces a “winter of risk” after the easing of some restrictions over the summer led to only weak signs of recovery, according to a key report today.

Many sectors of the Scottish economy, including retail, particularly during the initial lockdown period when all non-essential stores were shut, have struggled to regain traction. Picture: John Devlin

Publishing its latest quarterly economic indicator, the Scottish Chambers of Commerce (SCC) said the outlook was looking “grim in all sectors”, particularly for businesses in retail and tourism.

The bleak forecast comes despite signs of fragile confidence emerging in some areas of business over the summer. The business body said the underyling trends were “significantly negative” across most indicators when compared to pre-Covid conditions.

Employment levels were found to be negative across all sectors with the risk that jobless totals are set to “rise significantly” due to continued restrictions and a cutting back in government support.

About a third of construction and manufacturing businesses, four in ten retailers and more than half of tourism firms anticipate a further reduction in sales in the closing quarter of the year.

Meanwhile, the number of financial and business services companies reporting concern about rising taxation was the highest on record for the survey.

Tim Allan, president of the SCC, said: “This latest survey shows how fragile some parts of the economy in Scotland remain during this crisis.

“It makes sense that there would be some improvement compared to the previous quarter when significant parts of the economy were in an almost unprecedented shut down. But this winter brings significant risks for business, including further lockdowns and a decline in government support.

“Now is not the time to cut lifeline support. We expect joblessness to continue to rise, hitting hard from the start of November.”

Graeme Roy, director at the University of Strathclyde’s Fraser of Allander Institute, added: “The unprecedented government support – including bounce-back loans and the furlough scheme – has enabled many businesses to hang on over the summer. But as this support is wound down, many businesses will no longer be able to postpone the hardest of decisions.

“Aside from the impact of the restrictions themselves, the stop-start nature of our progress through this crisis is adding to the uncertainty and imposing its own additional cost on businesses.”

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