The Courier & Advertiser (Angus and Dundee)
Business must work with government to ease woes
There was so much to cause dismay in 2020 it was perhaps inevitable expectations would be high for the promise of a new and better year.
But as the year dawned so did a new mutant strain of the virus, along with an ever-increasing round of restrictions on businesses.
Nor is there any clarity on when these might ease as pressure builds to roll out vaccination programmes faster.
We would have liked to be in a better place by now.
Having lived with the pandemic for nearly a year, it is galling that we must be back at square one in terms of lockdown, with all hopes for freedom resting on enough people getting a needle in their arm.
The impact this has had on businesses is immense and while response from government has been unprecedented, it is not enough, particularly now that this lockdown stretches ahead of us indefinitely.
For every closure of a business or cancellation of a service there is huge frustration. Which is why it is so important that governments and their scientific advisers are clear on how and where the virus is transmitted, and how this guides the strategy on both imposing – and easing – restrictions.
Bank of England governor Andrew Bailey recently spoke to a virtual audience of almost 200 members of the Scottish chambers network.
From his point of view, government fiscal interventions such as the furlough scheme and rates holidays have served to spread the impact of shutting down the economy over time.
Support for business has reached record levels, while government borrowing has surged.
He was clear that without this support, the effects of the lockdowns would have been unbearable and the damage to livelihoods incalculable.
He warned we are facing our darkest hour yet, but said recovery would come with the vaccination programme.
Recovery won’t be as simple as reducing the virus spread. To fix the UK Government’s balance sheet, businesses need to come out strongly.
If we are to avoid being mired in debt, economic growth must exceed the cost of borrowing, the governor said.
Businesses must have the confidence to invest which will drive sustainable growth.
It is clear that business investment has been hampered for years, with much of this reluctance due to the uncertainties caused by the UK’S vote to leave the EU. Most welcomed completion of a deal, albeit one that was negotiated on a white-knuckle ride to the wire.
As the weeks progress
the implications of the deal will become clearer, whether it’s filling shelves in Northern Ireland’s supermarkets or shipping seafood to Spain.
Our research found that manufacturers in Scotland were busy as 2020 came to a close. With little knowledge of what the rules might be, deal or no deal, overseas demand boosted sales in the final quarter of 2020.
According to the Scottish Chambers of Commerce Quarterly Economic Indicator, confidence in the sector was actually in positive territory for the first time since Covid
struck. This small boost is unlikely to be repeated in coming months, which is why manufacturing must be adequately supported through the changes to trading rules with Europe.
Overall, the survey provided some grim reading on how businesses fared last year. All sectors reported lower levels of employment.
The extension of the furlough scheme has masked the worst impacts of the pandemic on joblessness, but there is a risk of mass job losses as it is due to end in spring.
Of course, the worse hit sector was tourism, which includes leisure, activity and event companies as well as hoteliers. Many of these are significant players in fragile rural economies, as well as essential to the vibrancy of town and city centres.
Restrictions have caused business failures and this is likely to worsen without massively increased support while trading remains closed. According to our survey, expectations in the sector for 2021 hit record lows.
Strathclyde University’s Fraser of Allander Institute, which works with SCC on the survey, has discussed the prospect of a “K-shaped” economic recovery in Scotland.
This is the idea that different sectors have suffered very different impacts from the lockdown measures and will have divergent pathways to recovery.
All sectors remain negative on plans for investment, dampening hopes of an easy, bounceback recovery.
This is why we need the UK and Scottish governments to put in place a sustained programme of business support, particularly for the hardest hit sectors, to boost economic recovery.
The business community needs a practical map and plan from spring 2021 which allows us to restart, invest, plan and hire.
A constructive and collaborative partnership between business and government can set us on the right course to grasp opportunity.