Sales drop in Scotland despite return to trading

Sales dropped across several sectors of Scotland’s economy despite returning to trading as coronavirus restrictions were eased, a new report has said.

The Scottish Chambers of Commerce (SCC) Quarterly Economic Indicator suggests retail and tourism were hit particularly hard ahead of a “bleak winter”.

More than half of retail and wholesale firms reported a fall in total and domestic sales in the third quarter of 2020, resulting in net balances of minus 28% and 27% respectively, with confidence at a net balance of minus 15%.

Nearly half of tourism firms reported a fall in sales compared with the second quarter while 70% reported a fall in business confidence.

Around a third of construction and manufacturing companies, four in 10 retailers and more than half of tourism firms are also expecting further sales drops in the upcoming quarter.

SCC president Tim Allan said: “This latest survey shows how fragile some parts of the economy in Scotland remain during this crisis.

“It makes sense that there would be some improvement compared to the previous quarter when significant parts of the economy were in an almost unprecedented shutdown. But this winter brings significant risks for business, including further lockdowns and a decline in government support.

“Now is not the time to cut lifeline support. 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 Scottish Government spokesman said: “We understand the huge impact the pandemic is having on Scotland’s businesses and continue to work closely with them to mitigate the effects.

“Almost £1bn has already been committed to support our economic recovery, including a £230m package for new capital projects and more than £100m to support recovery in sectors including culture and heritage, low carbon and hotels.

“We have made £100m available for employment support and training, including £60m to ensure every young person has access to a job, education or training.

“But the Scottish Government has limited resources and we share the Scottish Chamber of Commerce’s frustration at the UK Government’s decision to end the furlough scheme at the end of this month.

“The replacement Job Support Scheme does not go far enough and fails to take into account the current reality of local lockdowns or the slow pace of recovery in some sectors. Consequently unemployment is still likely to rise.

“That is why we, along with the administrations in Wales and Northern Ireland, are urging the UK Government to grant us the ability to switch money from the capital budget to day-to-day spending and for additional capacity to borrow. The need for these limited, temporary powers grows increasingly urgent.”