Commenting on the First Minister’s Covid-19 update, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said:
“The removal of the operating limits placed upon the hospitality, retail and evening economy is good news and will be welcomed by many businesses. With these restrictions lifting from 24th January, these sectors will finally be able to reopen fully and work to rebuild confidence after what has been a bleak winter.
“It will come as a relief for many hospitality and licensed premises that the government have chosen not to extend the vaccine passport scheme at this time. To do so would burden these businesses with further costs at a time when they simply cannot afford them and place jobs at risk. Any potential extension to the scheme must come with immediate financial support and be properly evidenced.
“However, it remains a great disappointment that the Scottish Government did not see fit to remove other remaining economic restrictions at this stage. We again urge the government to pick up the pace and work with the business community to devise a plan to allow the economy to fully reopen.”
On home working:
“Today’s update did not see any clear indication of an end date for the requirements around home working. This will confuse and frustrate businesses, particularly those in our town and city centres who rely upon the flow of office workers for income. Businesses are reporting that this inflexibility is having a growing consequence for the productivity and wellbeing of their staff.
“The government have indicated that they will engage with business on devising a hybrid approach from the beginning of February. Many businesses have already adopted hybrid approaches, in partnership with their employees, and simply await confirmation from the government that they can proceed on these return-to-work plans.
“We urge the government to remove the shackles from offices as urgently as possible to provide real choice for employers and employees. We cannot delay the removal of these restrictions any further.”
Commenting on the awarding of the latest ScotWind leasing round, Dr Liz Cameron CBE, Chief Executive of the Scottish Chambers of Commerce said:
“The ScotWind leasing programme is set to be a game changer for Scotland’s businesses and today marks an important step in supporting Scotland’s renewable energy and net-zero ambitions.
“ScotWind has the potential to bring in billions of pounds of investment into the Scottish economy, providing a springboard for recovery from the economic damage of the pandemic, whilst supporting a Just Transmission.
“As well as significant investment, there will be an unrivalled opportunity to create thousands of new skilled green jobs and to train, retrain and upskill employees from other sectors to support the off-shore renewables industry.
“The beneficial impact of ScotWind projects will be felt right across Scotland’s business community, through increased investment opportunities, improved and strengthened supply chains and giving our energy mix greater resilience.
“The Scottish Chambers of Commerce Network looks forward to working with the sector to support their ambitions and ensure Scotland’s businesses, people and economy can all equally benefit from this unique opportunity.”
Scotland’s predicted rapid return to pre-pandemic levels of economic growth has been put at risk as businesses report increased concerns over rising costs, recruitment challenges and concern over the return of COVID-19 restrictions, the latest findings from a leading quarterly survey led by the Scottish Chambers of Commerce (SCC) reveals.
The SCC’s Quarterly Economic Indicator (QEI) for the fourth quarter of 2021 indicates that the strong growth and reported rises in confidence have been dampened by increasing cost pressures, caution over investment and employment and continued economic uncertainty caused by the prospect of increased restrictions.
KEY FINDINGS:
- Surging inflation: With inflation rising to 5.1%, its highest rate in 10 years, concern over the business impact increased across all sectors in the survey, reaching record highs. The financial and business services sector (FBS) reported a 17% increase from Q3.
- Declining profitability: Businesses are reporting negative net balances for both cashflow and profits, both of which are down on Q3. The manufacturing, retail and tourism sectors all experienced a decrease, demonstrating the sustained challenges presented by a difficult trading environment and increased costs to doing business.
- Labour market pressures: Sectors including construction, FBS and retail are starting to experience increased recruitment difficulties and labour shortages with the end of the furlough scheme seemingly having little impact on increasing the availability of labour.
- Muted export growth: Ongoing issues in the domestic and global supply chain continue to impact on Scottish export sales and orders. All sectors reported marginal improvements in the past quarter, however, overall export growth remains weak, with the impact of Brexit continuing to lead to delays, certification challenges and increased shipping costs all of which are intensified by the wider impact of Covid-19.
- Volatile business confidence: Whilst the findings show a rise in business confidence, due to research being carried out prior to the reintroduction of restrictions in December, this is largely anticipated to have plummeted again.
Stephen Leckie, President of the Scottish Chambers of Commerce said:
“The Scottish Chambers of Commerce Quarterly Economic Indicator remains one of the longest standing and most accurate barometers of business sentiment in Scotland and this latest survey shows that the white heat of business activity that followed the lifting of restrictions in the summer months is now starting to cool.
“Business confidence continued to rise in the past quarter, however, this remains highly volatile as the Omicron variant triggered the return of COVID-19 restrictions plunging Scotland’s businesses back into a spate of economic limitations and curtailments.
“The continued strong return to economic growth many businesses might have expected in the next quarter is now clearly at risk and the recovery could now take longer than hoped for due to continued uncertainty over what economic deterrents are likely to remain in place and for how long.
“As Scotland adjusts to ‘living and working with COVID-19’ and the threat of new variants, it’s vital that the Scottish Government develop an economic recovery plan, in collaboration with business, which allows the economy to reopen fully and ends the continuous threat of a return of restrictions, allowing businesses to make a comeback in the months ahead.”
On rising business costs:
“Many businesses have had a tough winter and the rising cost of doing business is now also dragging on growth with increasing cost pressures for raw materials and goods driving down profitability. The intensifying inflationary pressures are a major concern for businesses, with rising costs of fuel, energy, raw materials and the removal of VAT and business rates reductions for hospitality and tourism increasing pressure on firms.
“Rampant inflation is now starting to outpace wages and if this imbalance continues to increase further in 2022, real household incomes will start to be affected, reducing consumer spending, and weakening Scotland’s overall economic activity.”
On international trade and exports:
“Exports remain frustratingly lacklustre which is a concern given exports remain a crucial part of a sustained economic recovery and internationalisation of Scotland’s economy. Alongside the removal of Covid-19 restrictions, businesses are looking towards the UK Government’s new free trade agreements, continued negotiations to remove barriers to exporting, and the possibility of more routes to new markets.
“Scotland also has significant labour market challenges and the UK Government must work closely with the Scottish Government to do all it can to ensure people can access rapid retraining opportunities for in-demand jobs and issue temporary visas for occupations and sectors experiencing labour shortages.”
Commenting on the results, Mairi Spowage, Director at the Fraser of Allander Institute, said:
“These results today signal important optimism in the underlying strength and resilience of the economy, albeit before the emergence of the Omicron variant.
“The emergence of this new variant, which is now the dominant variant of COVID-19, led to fresh restrictions on the retail hospitality, leisure and culture sectors being put in place in December. While many of these are not as severe as restrictions earlier in the pandemic, it will have been a huge challenge for many businesses operating in these hard-hit sectors, particularly through the crucial Christmas period.
“The emergence of this variant and the associated restrictions do have the potential to dent the optimism that many felt about growth prospects for 2022.
“Despite the familiar feel of December 2021, it is important not to forget how far we have come in the last 12 months. The economy is in a much better place than feared a year ago, underpinned by the delivery of the vaccination programme and the advancements made in understanding and treating the virus.
“Despite growth faltering in the Autumn due to rising prices and supply chain constraints, expectations are still much better for the outlook in 2022 and beyond, compared to what was feared earlier in the pandemic. The removal of the furlough scheme, based on the evidence we have seen to date, has not had the negative impact on employment and unemployment that was feared.
“However, what is emerging are early signs that Scotland’s recovery may be lagging behind the UK as a whole. The impact on employment and wages in the North East stands out as a particular concern, given the importance of high wage oil and gas jobs in that region.
“What is clear is that we are not past the point where government support for various sectors is likely to be required in order to reduce long-term scarring on the economy.”
Commenting on the First Minister’s Covid-19 update, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said:
“The lifting of restrictions on large outdoor events in Scotland will be welcomed by businesses and it also provides a much-needed boost to both business and consumer confidence.
“Thousands of businesses involved in the large supply chain that sits alongside the Scottish events industry have had to endure severe financial losses over what should have been one of the busiest times of the year, creating further uncertainty and holding back growth.
“Increased Covid-Certification spot checks will however continue to impact on businesses who require additional staff and resources to implement these Covid requirements and the Scottish Government should provide further financial support to businesses to help them off-set the impact of these ongoing economic deterrents.”
On retail, hospitality and the night-time economy:
“Businesses in the hospitality, retail and evening economy, as well as connected sectors, will find it incredibly disappointing that there will be no immediate further lifting of restrictions on them.
“The Scottish Government need to support all businesses by removing legal restrictions that limit capacity, depress profitability and makes it difficult for businesses to survive and grow. Business will be encouraged however that these remaining restrictions may finally be lifted from the 24th January.
“As we adjust to ‘living with Covid-19’ and the threat of new variants, it’s essential that the lifting of restrictions keep pace and that testing and vaccines take priority.
“In the meantime, businesses urgently need the financial support promised to them to be delivered as quickly as possible and additional financial support is made available should restrictions remain in place any longer.”
On home working:
“Offices are a vital part of our town and city centre economies and without the return of office worker footfall, businesses are continuing to suffer, leading to job losses and permanent closures.
“Businesses want to see consistency in the easing of COVID-19 restrictions and the return of office working must be part of these plans. As restrictions continue to ease, we must as a matter of urgency see an end date put in place for the requirements around home working, to allow businesses to plan effectively for 2022.
“Many businesses have clearly demonstrated that office are safe environments and employers, in consultation with our employees, remain best placed to take decisions on safe office return and hybrid working plans, and it’s important that Government enable this again as urgently as possible.”
Commenting on the Scottish Government’s changes to travel testing requirements for international arrivals into Scotland, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said:
“Scotland’s airports and our travel operators continue to be hit incredibly hard by the travel testing requirements introduced last month which resulted in a major slowdown in our recovery, increased costs for passengers and further undermined both business and consumer confidence.
“Scotland’s airports and international connections are vital to securing a strong economic recovery and businesses will welcome the decision by the Scottish Government to align pre-departure and return testing requirements with those in England. Any divergence on international travel testing between Scotland and the rest of the UK has a damaging impact on Scotland’s economy and urgent confirmation that any further reductions will be made on a four-nations basis is essential to keeping Scotland’s airports competitive.
“The Scottish Government should now use this opportunity to engage constructively with Scotland’s travel and airport industries to ensure they can look forward to recovery. Businesses linked to Scotland’s aviation sector need focussed policies to drive growth, supported by urgent action by the Scottish Government.
“The development of the new Scottish Aviation Strategy must be a catalyst for the Scottish Government to support the recovery of these hard-hit industries and restore, renew and expand Scotland’s international connectivity.
“Aviation in Scotland supports thousands of jobs directly and indirectly, it is therefore vital the Scottish and UK Government’s work together to ensure targeted financial support is made available for those businesses who need it and that Scotland remains open, welcoming and competitive internationally.”
Commenting on the First Minister’s Covid-19 update, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said:
“Businesses will welcome the changes that the Scottish Government have made to the self-isolation requirements.
“These changes should have a positive impact on businesses ability to operate and allow employees to return to work safely, whilst also safeguarding public health.
“Additionally, greater alignment and an enhanced four-nations approach towards testing is a positive step in the right direction and many businesses who were struggling due to staff shortages will now be able to open their doors again.”
On financial support for businesses:
“The announcement of additional targeted funding for some of the hardest hit sectors of our economy is welcome, however, the financial support being made available still falls considerably short of the losses businesses have incurred over the festive period due to the enhanced Omicron restrictions and guidance that remain in place.
“It’s vital that the Scottish Government and local authority partners now keep their foot on the accelerator to ensure that financial support is paid out as a matter of urgency.
“Scotland’s businesses need to see restrictions lifted as soon as possible and we urge the Scottish Government to go further and faster in their removal as part of the next three-week review.”
On home working:
“Businesses and employees want to see a clear end date for the current working from home requirements.
“Protecting staff morale and supporting employee’s health and wellbeing is reliant on giving them options on where they want to work.
“Offices are a vital part of our town and city centre economies and without the return of office worker footfall, businesses are continuing to suffer, leading to job losses and permanent closures.
“Businesses, in consultation with our employees, are best placed to take decisions on safe office return and hybrid working plans, and it’s important that Government enable this again as soon as practicable.”
The First Minister today announced some further COVID-19 restrictions which will come into force after Christmas Day, some of which will impact directly on businesses. Additionally, some initial guidance has been made available on the December and January Business Support Top Up for hospitality businesses.
First Minister’s Statement
You can read the full statement here and we have summarised the key points below:
Events
- No large public events from 26 December
- Events to be limited to 100 standing indoors, 200 seated indoors, 500 standing or seated outdoors
- 1m physical distancing in place at all events
- Sports matches to be spectator-free for 3 weeks
- Limits do not apply to life events such as weddings
Hospitality
- Return to table service only from 27 December for venues serving alcohol for consumption on the premises
- Indoor hospitality and leisure venues to ensure 1m social distancing between (but not within) groups
- Continue to advise that no more than three households are represented per group
Business Support
An additional £175m from UK Government and a further £100m from Scottish Government has been allocated, to a total of £375m.
Guidance on the December and January Business Support Top Up has now been made available for hospitality businesses, This can be read in full here and we have summarised the core points below:
Funding
This funding is being provided in the form of a one-off grant at the following rates:
- £4,500 for premises which have a rateable value of up to and including £51,000, or
- £6,800 for premises have a rateable value of £51,001 or above
The rateable value of the property is considered to be as per local authority records at 1 November 2021. Individual ratepayers with more than one business may receive an award for each registered business entity.
Eligibility
This strand of funding will provide support to businesses in the hospitality sector who have lost crucial bookings during the key festive trading period where they are registered as one of the following:
- public houses
- restaurants
- cafes
- other licensed premises classed as hospitality
- nightclubs
- hotels with bars and restaurants
Awards will be granted based on the primary function of the business and on the determination of the local authority that a business meets the eligibility criteria.
The business must be actively trading, and be able to demonstrate they were trading at 8 December 2021. The business must have a Business Bank Account and must not have breached wider COVID regulations/requirements prior to local restrictions.
Process
Local authorities will initially contact businesses that have previously received payments through the Strategic Framework Business Fund, and for the majority of businesses they will only need to confirm the following when contacted:
- that they are still a registered business
- that they were trading at 8 December 2021
- that they wish to receive funding
- that the details the local authority already holds is up to date
For new businesses set up since April 2021 which meet the other eligibility criteria, there will be a separate process. Further details will be confirmed in January, however the following core eligibility will apply:
- the business must have physical premises
- the business should be the main occupier
- the business owner should be responsible for paying non domestic rates
- the business was trading as an eligible business as at 8 December 2021
Other Sectors
Support will also be made available for other affected sectors and we expect guidance for these to be published shortly. For these sectors, grants will be administered by the following partners:
- wedding sector supply chain – enterprise agencies
- wholesalers affected by hospitality cancellations – Scottish Government
- tourism sector – VisitScotland
- culture sector – Creative Scotland
- events sector – EventScotland
As always this is a fast-moving situation and additional guidance and clarity is being provided on a regular basis. As soon as we have further details our members will be the first to know. In the meantime, if you have any questions or need clarification on any of the existing guidance, please don’t hesitate to get in touch with the Chamber.
Commenting on the First Minister’s COVID-19 update, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said:
“Businesses across Scotland have already lost millions of pounds in trade due to the return of restrictions and the confirmation that yet more restrictions will come into place from Boxing Day will be another hammer blow for employers and Scotland’s economy.
“Businesses across Scotland, who have been doing everything they can to keep their employees and customers safe, will be bitterly disappointed by these further restrictions. Some businesses and sectors will view this update as the equivalent of receiving a lump of coal in their Christmas stocking, further compounding the downturn in trade they have experienced in the crucial run up to the festive period.
“Businesses now urgently need to see the guidance and regulations that underpin this announcement to understand the full impact these changes will have on their capacity, how they operate and if they will even be able to open at all.
“The announcement of further additional financial support from the UK and Scottish Government for businesses today is welcome, however, it still does not go anywhere near far enough to compensating for the enormous financial losses firms are experiencing. January is beginning to look increasingly bleak for businesses and the prospect of an early return to economic growth in the New Year is now clearly at risk.
“It’s essential that the Scottish and UK Government do everything they can to get financial support out to businesses as quickly as possible and go further to ensure additional financial support is made available as a matter of urgency or the viability of more and more businesses will be put in the balance.
“The vaccination and booster programmes remain our best way back out of this crisis and again, both Governments need to work together to accelerate the rollout over the coming days and weeks to enable the removal of these additional restrictions at the earliest possible moment.”