Scots small firms deemed 'heroes of pandemic' after boosting innovation spend

A Scottish business leader has hailed small firms as the “heroes of the pandemic” after a study revealed that those north of the Border ramped up their spending on innovation in the wake of the Covid-19 outbreak.

Glasgow-based MCC Accountants, which represents more than 150 small companies, has cited a recently published Scottish Government report finding that firms with fewer than 250 employees invested £143 million in research and development (R&D) in 2020.

That is up by nearly a quarter from 2019, and more than double the amount six years ago – and equates to an average of almost £400,000 a day altogether on innovation.

In contrast, big businesses cut back their spending to under £1 billion for the first time since 2017 as they struggled to adapt to tight lockdown restrictions, according to the report on R&D spending.

'These figures show just how hard small businesses in Scotland fought to stay afloat and serve their customers during the pandemic,' says MCC Accountants of the Scottish Government data (file image). Picture: Ian Rutherford.

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However, the report also revealed that Scotland remains significantly below other parts of the UK when it comes to such an outlay.

The data showed a slight overall increase in cash-terms investment in 2020, bringing the annual total to about £1.4bn, of which 79 per cent was funded from businesses’ own pockets, with government funding totalling just 8 per cent.

Edinburgh was the top area for investment, with more than 30 per cent of the Scotland total. Just 5.3 per cent of spending was recorded north of the Border, leaving Scotland behind the east of England, the South East, both the East and West Midlands, London, the South West and the North West.

Andrew Morrison, director of MCC Accountants, said: “These figures show just how hard small businesses in Scotland fought to stay afloat and serve their customers during the pandemic.

“From an economic perspective, they were the heroes of the pandemic. Without their determination to innovate and adapt to unprecedented conditions, many people would have been without the services they take for granted and definitely need.

“It says a lot that while large firms were winding back on research and development, businesses of fewer than 250 staff were ramping up their activity.

“We should all be grateful for the role small businesses continue to play during this global crisis. Their commitment to customers and enterprising approach is unrivalled, and they are an absolute credit to Scotland the wider UK.”

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