Chamber warns firms exhausted and facing hurdles on road to recovery

THE limits on trading brought by continuing coronavirus restrictions have left companies “close to exhaustion,” a leading Scottish business figure has declared.

Tim Allan, chairman of Scottish Chambers of Commerce (SCC), underlined the toll on business from “some of the most challenging trading conditions in modern history” as the group revealed the findings of its latest quarterly report. It warned that businesses in Scotland “face significant hurdles” on the path to recovery.

The Quarterly Economic Indicator (QEI) for the first quarter, which completes a full year of measuring the effects of lockdown on businesses, shows retail was the worst performing sector over the first three months of the year.

Non-essential retail has largely been closed to suppress coronavirus infection rates over the period, leading to a significant weakening of confidence. Confidence in retail and wholesale dropped by 14 percentage points from the fourth quarter of 2020 to -24 per cent, the survey found.

All sales trends remained at negative balances, with domestic sales plunging by 34 percentage points from quarter four to -48%.

The survey also found confidence remained weak in the tourism sector, though it noted there had been some easing since the previous quarter, at -32%. More than seven in 10 reported a fall in sales compared with the fourth quarter of last year, with only 4% reporting a rise. This produced a negative net balance of -71%, the survey found.

Mr Allan 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 programme, 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.”