Government warned ‘reckoning’ lies in store for Scottish business amid new demand for cash support

Scottish Chambers of Commerce (SCC) has called for “targeted sectoral interventions for those businesses most at risk” and for support for regions hardest hit by the Covid-19 fallout.

The demands follow findings in SCC’s latest coronavirus survey tracker, published today, which reveals that eight in 10 firms regard the threat of another national lockdown or potential local lockdowns as their most significant concern. It comes amid a continuing local lockdown in Aberdeen, brought into force last week following a spike in infections linked to a pub in the city. As of last night, there were 182 confirmed cases as part of the cluster. The Federation of Small Businesses (FSB) in Scotland called for local grants to be made available in Aberdeen if the lockdown is continued beyond the current seven-day extension.

Liz Cameron, chief executive of 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.

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“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 must also see tailored support to meet the need of businesses at an increasingly individual level.”

The SCC survey comes in the week it was confirmed that the UK had moved into recession in the second quarter, after the economy contracted by 20.4 per cent, quarter on quarter, in the April to June period – a record fall. Official figures this week also showed that unemployment continues to surge, with the UK claimant count soaring 1.2 million in March to 2.69 million in July.

SCC found that 89% of the 412 responses to its survey had not let staff go by this point, while 87% pledged to retain staff over the next month. However, with the UK Government furlough scheme now unwinding, the percentage of firms stating they would not let staff go in the next three months was 74% . That percentage fell further, to 68%, for the six-month horizon. The furlough scheme will close in October, and between now and then the amount of support provided by Government to help firms retain staff will be reduced, while employer contributions will rise.

The SCC found 60% of businesses have employees on furlough.

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Ms Cameron added: “Scottish businesses have already demonstrated that we are adaptive, innovative, and resilient, but the challenges we face over the next few months, potentially years, warrants a response from Government that is just as substantial.

“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 becomes more interested in working with businesses.”

Concerns about further lockdowns are followed in firms’ worries by fears over poor customer demand. With 63% citing this as a key concern, SCC said restoring consumer confidence remains an ongoing challenge.