Scottish firms 'close to exhaustion' and requiring further support

Businesses in Scotland are at a crossroads – both examining the damage caused by the pandemic and facing significant hurdles to economic recovery, according to the latest results of an influential survey.

The Scottish Chambers of Commerce (SCC) said its study of the first quarter of 2021 completes a full year of measuring the effects of lockdown on businesses and the harm it has caused “all aspects” of business including employment and investment, and identifies continued fears for the future.

The organisation said the effects of lockdowns have varied by sector, with retail performing worst in the latest survey, seeing optimism and sales slump. Tourism businesses welcomed the prospect of the return of domestic visitors, but many continued to report drops in cashflow in the three-month period while recruitment remained at what the SCC said were some of the lowest levels in the survey’s history.

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The worst performing sector in the survey was retail, according to the SCC. Picture: Andy Buchanan/AFP via Getty Images.

Trading difficulties with Europe emerged as a major issue for companies in both financial and business services and manufacturing, “although there were signs of emerging confidence in both sectors”. Turning to construction, confidence also remained muted as costs spiralled, although the contracts pipeline remained in positive territory.

SCC president Tim Allan commented on the survey, which took place between February and March with 370 firms responding, and is said to be Scotland's longest-running economic survey of its kind.

He said: “Businesses in Scotland are close to exhaustion as they continue the slog through some of the most challenging trading conditions in modern history… serious questions over how long trading will continue to be limited remain while businesses trading with the EU have faced fresh difficulties at the border.

“At the end of a full 12 months of trading restrictions, there were a few signs of optimism as businesses looked forward to the effectiveness of the vaccination program, highlighting the resilience of those that have survived the pandemic. However, now is not the time to drop the ball… governments new and not so new must commit to this and give them the best possible deal if we are to create jobs and return to sustainable growth.

“Ahead of the elections, SCC has called on Scottish ministers to pass a Business Growth Act within the first 100 days of the government to address the most urgent issues facing businesses right now, including reducing upfront business costs, boosting international trade and upskilling our workforce.

Reset

"Fundamentally, we need the Scottish government to reset its relationship with business so that ministers are speaking the same language of growth, jobs and economic prosperity.”

Mairi Spowage, director at the University of Strathclyde's Fraser of Allander Institute, noted the imminent Scottish election, adding: “There is little doubt that getting the private sector back on its feet is an important cog in the wheel that will move us forward.

"Any future government activity in this area will need to be flexible and responsive, and credibility and focus will be required in helping the private sector navigate its way out of this crisis with as many good quality jobs intact as possible.”

Additionally, the SCC’s chief executive Dr Liz Cameron addressed some loosening of lockdown restrictions in Scotland – but said the announcement “has not offered solace for businesses who are ready to safely open up now”.

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