SCC: Scottish businesses continue to count costs of pandemic

Businesses in Scotland are at a crossroads as they take stock of the damage caused by the pandemic and face significant hurdles on the way to economic recovery, according to a leading quarterly survey led by the Scottish Chambers of Commerce (SCC).

The SCC’s Quarterly Economic Indicator (QEI) for the first quarter of 2021 completes a full year of measuring the effects of lockdown on businesses and the damages it has inflicted on all aspects of business including employment and investment and identifies continued fears for the future.

The lockdowns have had different effects depending on sectors. The worst performing sector in the survey was retail, which spent most of the quarter in lockdown with optimism and sales having collapsed. Tourism businesses were feeling a bit more positive about the potential for the removal of lockdown conditions and welcoming the prospect of return of domestic visitors. However, significant numbers of businesses in the sector continued to report cash flow declines in the quarter while recruitment remained at some of the lowest levels in the history of the survey.

Trading difficulties with Europe emerged as a significant issue for businesses in both financial and business services and manufacturing, although there were signs of emerging confidence in both sectors. Confidence among businesses in the construction industry also remained subdued as costs have spiralled, although the contracts pipeline remained in positive territory.

Tim Allan, President of the Scottish Chambers of Commerce said:

“Businesses in Scotland are close to exhaustion as they continue the slog through some of the most challenging trading conditions in modern history. As the easing of restrictions come, albeit slowly, 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. Rising costs is also a significant issue.

“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 – ensuring businesses remains on solid ground will be critical. 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. Fundamentally, we need Scottish Government to reset its relationship with business so that Ministers are speaking the same language of growth, jobs and economic prosperity.”

Commenting on the results, Mairi Spowage, Director at the University of Strathclyde’s Fraser of Allander Institute, said:

“Of course, the economic backdrop sets the scene for a very different election campaign in the next month or so in the run up to 6th May.

“The next five years holds a lot in store. Economic fortunes in the next year will be influenced heavily by Covid (again) and there could be considerable pain still to come once government support starts to be removed. This could see GDP falling again over the course of the year and expectations are that unemployment will rise.

“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.”

The full Q1 Quarterly Economic Indicator report can be downloaded here

Responding to the Scottish Government’s latest review of lockdown easing, Dr Liz Cameron OBE, Chief Executive of the Scottish Chambers of Commerce, said:

“Today’s announcement has not offered solace for businesses who are ready to safely open up now. We have been calling for the crucial detail behind the levels criteria to be published. Without this, it is impossible to properly plan for re-opening, especially if there are any plans to impose additional conditions on businesses. The lack of this detail leaves businesses in the dark and we need to see the levels criteria published quickly.

“It is clear we are on the right track with social restrictions easing so we can see more of our friends and family. However, the business community needs to see the Government shift its focus to easing economic restrictions too. Only then will we be able to re-open our businesses and kickstart our economic recovery.”

Responding to the UK Government’s announcement on a traffic light system for the restart of international travel, Dr Liz Cameron OBE, Chief Executive of the Scottish Chambers of Commerce, said:

“Whilst this announcement does not give a full and meaningful restart to the aviation and tourism industry, there are signs of green shoots emerging. The new green category does not require burdensome quarantine measures, giving some element of confidence to passengers and airlines. We will want to know the list of countries and travel criteria as soon as possible to give the industry and consumers time to prepare for re-opening, booking journeys and planning with confidence and clarity.

“The proposed testing and quarantine regime addresses some of our concerns but will still add significant costs that could restrict the industry’s customer base and limit destination options. Our airport operators have already invested millions in effective testing: the UK Government needs to quickly consider and explore affordable options which have been proven to be equally as effective.

“We still have remaining concerns that there is not yet a four-nations approach to the restarting of international travel, with potential disparity between the nations of when and where people can travel. We need a joint approach across the nations if Scottish businesses have any chance of rebuilding and retaining jobs. Failure to do so will only add further confusion and massive financial impact on Scottish airports and its supply chain.”

Caithness Chamber of Commerce is pleased to announce that, thanks to continued support from Dounreay Site Restoration Ltd (DSRL), it will be extending and expanding its business support programme for a further three years.

The financial support from DSRL will enable the Chamber to provide support to both new and existing businesses across Caithness and North Sutherland. New to this programme is a package of sustainability support, aimed at helping businesses throughout the region understand and develop sustainable solutions to help them grow.

The Chamber will be working closely with partner organisations like Zero Waste Scotland to help businesses in the North Highlands understand what support is on offer and how they can access it. Bespoke support will also be available to help guide businesses throughout their sustainability journey, helping them to find solutions that are appropriate and will enable them to grow and profit in the long-term as well as becoming more sustainable.

Support for those looking to start up a new business will also continue to be provided, with the Chamber’s expert local team on hand to give advice and guidance on everything from finance to marketing.

Trudy Morris, Chief Executive of Caithness Chamber of Commerce, said:

“Sustainability and the need for a green economic recovery from the COVID-19 pandemic are high on the agenda for both UK and Scottish Governments. We believe that businesses do have a role to play in addressing the climate emergency and that this does not need to be a burden but rather can be an opportunity to reexamine the way we work and make a positive difference to our businesses, as well as to our communities.

“Delivering our existing programme of business support has been a valuable and rewarding experience for the Chamber, and we are delighted that DSRL have provided financial support to allow this programme not just to continue but to expand in exciting new directions.

“Our team has worked tirelessly to support not just our members but all businesses across the North Highlands through the COVID-19 pandemic. We believe passionately that a strong, sustainable business community benefits everyone, and look forward to taking on this new challenge.”

Responding to the latest update on lockdown restrictions from the First Minister, Dr Liz Cameron OBE, Chief Executive of the Scottish Chambers of Commerce, said:

“Businesses will be relieved on the confirmation that hairdressers, click and collect services and garden centres, will be able to re-open from 5^th April. As the vaccine rollout continues to give us all optimism, more businesses in our crucial retail and hospitality sectors still await word on whether or not they will be able to re-open at the end of April.

“Missing the Easter period, which is usually a boom period for retail and hospitality, means that the delay to re-opening risks widespread business collapse. Government must also consider a further package of business support to help these businesses survive over the next few crucial weeks.

“Businesses are on tenterhooks as we await further detail from the Scottish Government on what the revised level criteria will look like. This detail is critical and needs to provide businesses and consumers the confidence and hope that they can expect to see their hard work on suppressing COVID-19 rewarded.

“Until then, we all must continue to follow government guidance to ensure these businesses will be able to return without delay. Businesses have spent millions and millions in creating safe environments to re-open, they are ready to operate safely and support their local communities.”

Responding to the latest update on lockdown restrictions and the outline of indicative dates for the re-opening of the economy from the First Minister, Dr Liz Cameron OBE, Chief Executive of the Scottish Chambers of Commerce, said:

“Businesses have been patiently waiting for indicative dates to re-open and today’s announcement is a good start. It will enable many businesses and customers to start planning and preparing for re-opening with confidence and optimism.

“In particular, the intention to relax travel restrictions should support the viability of the tourism, hospitality and retail sectors. We are pleased to hear that the Scottish Government will work with the UK Government and the travel & aviation sectors to look at the detail as to how international travel can re-open safely and quickly. We also need to see clarification of what is allowed in the various levels of restrictions, sooner rather than later. We would urge alignment across all UK nations which enables the industry to restart together and to avoid confusion for travellers.

“There is still a lot of work to be done to plan for the re-opening of the remaining sectors of the economy. We are now looking to engage on the granular detail of the levels, associated criteria and trigger points. We will work with government to help enable that to be done as quickly and as safely as possible, in line with the continued successful roll-out of the vaccination programme.”

Commenting ahead of the March 16^th lockdown update from the Scottish Government, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, said:

“We are in a different place now than we were two weeks ago, with good progress being made on both the roll-out of the vaccination programme and numbers of new cases reducing. This has been achieved through responsible behaviours by both businesses and our communities.

“Against this backdrop and forward predictability, we are looking for the First Minister to announce a detailed plan with  timelines  as to when businesses can re-open, finally enabling us to bring our staff back and welcome our customers into our secure and safe environments. This lockdown in particular has had a devastating impact not only on our survivability, but the additional and growing mental health factors impacting on business owners, leaders and our employees which needs to be addressed.

“We have also called for the Scottish Government to be clear that Scotland is “open to do business”. This could happen quickly with the removal of any Scotland-wide travel ban. The majority of businesses and communities have behaved responsibly, whilst continuing to follow the rules. Without the ability to travel, our tourism, leisure, and entertainment industry may not survive at all.

“We need a managed risk approach focused on any local outbreaks being dealt with immediately.”

Responding to the UK Government launch of a consultation on proposals to reduce the cost of Air Passenger Duty (APD) on domestic flights, Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, said:

“Any moves to reduce the charges on domestic flights is fantastic news. The Scottish Chambers of Commerce Network has long been asking for the removal of APD and we are pleased to see the UK Government picking this up and progressing with it.

“If we are serious about boosting inward investment, not to mention supporting a tourism industry devastated by the pandemic, we need to act on this now.

“Further, the removal of APD would show Scotland is open for business. Airports in Scotland face an existential threat as a result of Covid-19 and efforts must be made to ensure they remain competitive in a global marketplace in order so they can continue to support trade and Scotland’s links to the world.”