Latest Fraser of Allander and Scottish Chambers of Commerce report
The latest Scottish Chambers of Commerce (SCC) Quarterly Economic Indicator in partnership with the University of Strathclyde Business School’s Fraser of Allander Institute survey for Q3 of 2020 has been published (October 8).
The outlook remains grim in all sectors, particularly for businesses in retail and tourism, which have been hit hard by restrictions and face a bleak winter as business support and confidence plummets. Firms in the survey reported only weak signs of recovery where a return to trading was allowed as COVID-19 restrictions eased over the summer.
Commenting on the results, Professor Graeme Roy, director of the Fraser of Allander Institute, said, “It is a little over six months since the World Health Organisation declared a global pandemic, ushering in the largest upheaval to our day-to-day lives in over 70 years. The ensuing economic crisis has been severe: the Scottish economy shrunk by nearly a fifth between April and June. This latest Chambers of Commerce survey shows that we are far from being out of the woods just yet.
“Businesses’ outlook on the economic environment in Q3, coupled with levels of activity in the wider economy, remain much more negative than where they were at the start of the year. This comes on the back of one of the worst quarters for business confidence ever recorded in this survey.
“The tourism and hospitality sectors remain at the centre of this economic crisis – and this comes through clearly in the survey. This is an extremely serious and harrowing period for business owners and employees in this key part of Scotland’s economy – and raises questions about the survival of key parts of the industry.
“But it is important to remember that these sectors of our economy are important suppliers and consumers within the broader economy – it might be hospitality and tourism that face the tough decisions first, but the ripple effects will reach most parts of the Scottish economy in time.
There is an urgent need for government support."
Tim Allan, President of the Scottish Chambers of Commerce, said, “We are far from being out of the woods and this survey shows how fragile some parts of the economy in Scotland remain.
“It makes sense that there would be some improvement compared to the previous quarter when significant parts of the economy was in an almost unprecedented shut down. But this winter brings significant risks for business, including further lockdowns and a decline in government support.
“Now is not the time to cut lifelines. We also urge the Scottish Government to avoid a stringent lockdown which would be both ineffective and costly. We must use tools such as track and trace and data we have more effectively to avoid damaging national restrictions. A return to the same or similar conditions that prevailed in March would be catastrophic for the Scottish economy.
“We expect joblessness to continue to rise, hitting hard from the start of November. There’s an urgent need to bridge the skills gap between those who have lost their jobs to those employers that are still recruiting. Plans to develop and support training and retraining in areas such as digital and low carbon technologies will need to be implemented if we are going to build back better.
“Many sectors are showing increased worry about the risk of increased taxation. Coronavirus interventions represent a huge burden on the public finances, but we must ensure that business recovery is not strangled to repair them.”
A copy of this report can be downloaded from the Scottish Chambers of Commerce Network
Published: 9 October 2020