Confidence in business at historic low, survey suggests

The latest survey from the Scottish Chambers of Commerce (SCC) shows that levels of confidence in business across all sectors is at a historic low.

Retail, tourism and construction have been the worse hit during the Covid-19 crisis.

An economic adviser has said the Scottish economy faces a challenge post lockdown.

While furlough has been successful in limiting job losses during the crisis, long term, employment levels are expected to drop.

Cash flow has also sunk to a record low for many industries, with a high number of companies applying for credit to see themselves through lockdown.

Professor Graeme Roy, director at the University of Strathclyde’s Fraser of Allander Institute, said that the latest survey painted a sombre picture of the scale of the challenge now facing the Scottish economy.

He added: “Across the board, confidence has plummeted, with a sharp fall in sales, turnover and investment across the business base.

“Chief amongst these was the unprecedented response from the tourism community, where a staggering – albeit not unsurprisingly – 95% of firms reported a fall in business confidence.

“What is particularly worrying is the employment outlook. The survey shows a clear warning of what is to come, with a sharp rise in unemployment now inevitable as businesses adjust to a new normal.

“The immediate priority for many businesses is survival.”

Tim Allan, president of the SCC, said that the circumstances surrounding the results mean they should not come as a surprise.

He added: “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.”

Mr Allan continued: “It is critical that governments in Holyrood and 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.”