AS the health impact of Covid-19 grows exponentially, so too does its economic impact. Businesses are working 24/7 to keep their people safe and their operations functioning.
Difficult decisions are having to be made each day and people’s safety must always come first. The announcement on school closures feels necessary, but of course will present challenges for parents and carers.
Even with preparations now underway, we know firms are operating in unsettling times - with some hit harder than others – particularly Scotland’s vital hospitality and tourism sectors. Others are working through contingency plans and implementing policies to support their staff working from home and bolstering mental health support.
This week’s huge increase in UK Government-backed loans, higher cash grants and widened business rates relief for some sectors will help firms protect jobs and businesses. All now need to be delivered on the ground with speed and simplicity. The Chancellor is right to commit to doing ‘whatever it takes’; nonetheless the situation will not stand still so nor can the economic support.
We know that vital supply chains in the retail sector remain robust, despite some selfish stockpiling however, longer term, we could see supply issues for manufacturers and tech firms – particularly those sourcing from hardest-hit countries like Italy and China.
We should give credit to the UK and Scottish Governments for their actions so far in supporting enterprise. ‘Whatever it takes’ is a reassuring message, while clear expert-led advice, using organisations like the CBI to speak directly to firms, has been coupled with much-needed fiscal measures to ease pressures in the short-term. Yes, there’s more to do, but things are moving in the right direction.
Initially we saw the Bank of England and Treasury launch swift, coordinated action on interest rate reductions, business rates suspensions and sick pay support – interventions that are not only effective but have been greatly welcomed by businesses, particularly SMEs.
These were matched by proactive steps from the Scottish Government to ensure measures outlined by Westminster also reach Scottish companies. Specific support for key sectors, freezing rates and introducing grants are all important moves, and it’s vital that we maintain a level playing field with firms in England. That’s why business has to work closely with government, both national and devolved, to ensure our response is fast, effective and localised.
Firms large and small know the combination of dipping demand and disruption in supply is a perfect storm for cashflow problems. And then there are critical sectors - including healthcare, food, energy and transport – that must be supported to keep the country working. Temporary changes in regulation and/or government co-ordination should also be looked at to enable companies to focus on the most urgent tasks.
At the CBI we’re doing what we can to provide round the clock support to our members, sharing advice on what’s working, and ensuring both governments have the most up-to-date information from factory floors and boardrooms across the country.
The good news is that the UK economy is well placed to weather the storm. Even in Scotland, where consistent growth has been a persistent challenge, the economy has proven itself remarkably resilient through a number of crises – from the financial crisis to prolonged Brexit uncertainty.
While public health remains the priority, our economic response must remain equally agile and ambitious. By working together – business, the UK and Scottish governments – and trusting in the great expertise we have in this country – we will put in place the building blocks needed to ensure we recover quickly, while protecting as many firms and jobs as possible.
Tracy Black is the director of CBI Scotland
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