Scots firms see 'deep and rapid' Covid-19 impact - but bullish over government support

The global coronavirus pandemic has had a “deep and rapid” impact on the Scottish economy, and while “unparalleled” government support for businesses will be widely-used and deemed to be effective, kinks in such measures need to be ironed out, a new report out today says.

Steps should be taken to tackle obstacles to accessing emergency funding. Picture: Ian Rutherford.

The new Addleshaw Goddard Scottish Business Monitor, produced in a partnership between the international law firm and the Fraser of Allander Institute, is billed as one of the first major surveys of Scottish companies since the start of the global health emergency.

It received responses from nearly 500 Scottish-based businesses between 1 and 8 April, and found that a significant proportion have either already applied for, or intend to apply for, at least one of the government’s five key support schemes.

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According to the Fraser of Allander Institute, while the large-scale shutdown of all-but-essential activities in the Scottish economy was an appropriate response to the global health crisis from a public health and long-term economic perspective, the immediate financial consequences for a large number of businesses across most sectors are “stark”.

The most popular support mechanism for businesses by far was found to be the Job Retention Scheme, with near to 90 per cent either already adopting the scheme or planning to do so. Additionally, the majority of these plan to furlough more than half of their staff.

Of those planning to use the government policies, 90 per cent expect the support to be very effective or effective to the survival of their business.

Access issues

But when asked how easy it has been to access government support, most respondents deemed the schemes difficult to access – at 60 per cent for the coronavirus business interruption loan scheme. “However, it is important to note that early teething problems, which were to be expected due to the government’s rapid response, are now being overcome,” the report’s authors said.

Graeme Roy, director of the Fraser of Allander Institute, said the survey shows firms are supportive “in principle” of many measures announced by government, and believe they will help many firms survive. “However, time will tell how easy these schemes are to access, who is falling through the cracks, and the degree to which they are sufficient to help business through this unprecedented time.”

Gaenor Cassell, a partner in Addleshaw Goddard’s Scottish corporate lending and borrowing team, said it is clear firms “continue to be in desperate need of cash”. She added: “It is therefore vital that where obstacles to accessing emergency funding remain, changes are quickly made to allow these to be overcome.”

David Hughes, a partner in Addleshaw Goddard’s Scottish employment team, said many employers will be hoping that the social distancing restrictions can be lifted before the Treasury runs out of money to fund the Job Retention Scheme. “There is, of course, no sign when that will be, and conversations we are having with businesses are increasingly turning to longer term options and what happens post furlough.”

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