The latest Scottish Chambers of Commerce Quarterly Economic Indicator survey for Q2 of 2020 confirms the economic pain that has been felt by Scottish businesses across sectors in all parts of the country due to the Coronavirus (COVID-19) outbreak and the subsequent lockdown.
In many instances, these results are among the worst over the 30-year history of the survey. However, the circumstances of which they have arisen means that they should come as little surprise. COVID-19 has drastically halted or limited activity across all sectors of the Scottish and global economy.
Levels of confidence have fallen to historic lows in many of the sectors, with construction, retail & tourism most affected by the crisis.
Employment trends suggest the UK Government furlough scheme has been successful in limiting the scale of job losses. However, negative employment expectation levels highlight the long-term challenge for businesses to retain employees and protect jobs.
Cashflow – a key economic indicator of how a business is able to cover costs and report profits – has fallen to record lows for many sectors. In every sector, with the exception of manufacturing, the proportion of firms applying for credit is at the highest level since the question was introduced in 2014.
Many businesses will have had to rely on cash reserves and government support schemes to meet fixed costs, with overhead costs rising across all sectors.
Our message to government is this: work productively with businesses in our shared aim of protecting jobs and local economies that may be lost forever if action is not taken now.
Businesses are eager to do whatever they can to adapt to what will be a testing business environment; which will include changing workplace practises, dramatically evolving business models and re-skilling the workforce which will be critical across all sectors. It is critical that governments in Holyrood & Westminster continue to provide business support for companies during and beyond the easing of lockdown restrictions.
A sudden end to these vital financial support measures would not be welcome by anyone and a tsunami of jobs would disappear overnight. Looking towards the future, governments must accelerate investment plans to fuel economic demand and activity as well as providing support for sectors to adapt to the new economy. This must go hand in hand with job guarantee and training schemes that ensure that we do not see a lost generation of talent.
It is now more important than ever that we channel our investment and resources to looking outward. This should involve getting contracts and connections for Scottish businesses to explore, identify new ways to sell our products and our services, and to promote Scotland’s assets and the enormous talent we possess.