Scottish businesses facing ‘reckoning’ as support dries up

● Scottish Chambers of Commerce says threat of fresh lockdowns chief concern

Scottish business leaders have pleaded for fresh financial support to cope with further lockdowns as cashflows come under renewed pressure.

Eight in ten firms regard the threat of another nationwide lockdown or potential local restrictions as their most significant concern, according to a new study by the Scottish Chambers of Commerce (SCC).

The organisation’s coronavirus survey tracker revealed that more than half of firms (56 per cent) have seen lower levels of cashflow compared to one month ago.

It also found that the vast majority of businesses in Scotland are doing their utmost to retain staff despite high levels of concern over the risk of further lockdowns and the planned phased withdrawal of the UK government’s jobs furlough scheme.

The survey confirmed recent official employment statistics, with only a small proportion of firms (11 per cent) having made staff redundant since lockdown measures came into force.

However, the number of employers who believe they will continue to avoid redundancies starts decreasing over the coming months. Almost three quarters (74 per cent) expect they will retain their staff in the next three months. However, this reduces to 68 per cent as the furlough scheme comes to an end in October.

A significant majority (63 per cent) of businesses are concerned about the need to drive up demand, indicating ongoing challenges in restoring sufficient consumer confidence to boost the economy, the SCC noted.

Liz Cameron, chief executive of the SCC, said: “We fear a reckoning as some companies, particularly in tourism, hospitality and retail decide it is no longer viable to restart or continue in the coming months.

“We must achieve a balance between looking at long-term ambitions and strategies for growth alongside concrete action in the months ahead to ensure we retain as many businesses and jobs as possible. It is not one over the other.

“For those sectors which remain closed or have just resumed operations recently, helping them back to work and restoring consumer confidence as quickly as possible is crucial to their immediate survival.

“Alongside a cautious outlook for employment, the tracker survey highlights there is a need for more action by government to cut further the upfront costs of doing business. There is a need for more direct fiscal support in the form of targeted sectoral interventions for those businesses most at risk as well as targeting regional areas where the impact of the virus has hit harder than in others.

“We cannot just play at the edges – we need to harness the resilience, the ambitions and the skills of business and political leadership to fundamentally rethink how we ensure government at all levels become more interested in working with businesses.”