The impact of the Covid-19 trading restrictions has left businesses in Scotland “close to exhaustion”, the president of the Scottish Chambers of Commerce has warned.
Tim Allan’s comment came as the organisation today published the findings of its latest Quarterly Economic Indicator for the first quarter of 2021, marking a full year of measuring the effects of lockdown on companies.
His concerns were echoed by chamber leaders in the north and north-east.
The worst-performing sector in the survey was retail, which spent most of the quarter in lockdown, with optimism and sales having collapsed.
Tourism businesses were slightly more positive about the potential for the removal of restrictions and the prospect of the return of domestic visitors.
But significant numbers of businesses in the sector continued to report cash flow declines over the three months, while recruitment remained at some of the lowest levels in the history of the survey.
Trading difficulties with Europe emerged as a significant issue for businesses in both financial and business services and manufacturing, although there were signs of emerging confidence in both sectors.
Confidence among firms in construction also remained subdued as costs have spiralled, although the contracts pipeline remained in positive territory.
Mr Allan said: “Businesses in Scotland are close to exhaustion as they continue the slog through some of the most challenging trading conditions in modern history.
“As the easing of restrictions come, albeit slowly, serious questions over how long trading will continue to be limited remain while businesses trading with the EU have faced fresh difficulties at the border. Rising costs is also a significant issue.
“At the end of a full 12 months of trading restrictions, there were a few signs of optimism as businesses looked forward to the effectiveness of the vaccination programme, highlighting the resilience of those that have survived the pandemic.
“However now is not the time to drop the ball – ensuring businesses remain on solid ground will be critical.”
Shane Taylor, policy manager at Aberdeen and Grampian Chamber of Commerce added: “We know that there’s a real risk of heightened business failures in the aftermath of an economic crisis like the pandemic and the north-east is no different to any other region in that respect.
“This makes it all the more important that both governments provide firms with the outstanding detail on the path to reopening, and commit to extending key support schemes for as long as is needed.”
Stewart Nicol, chief executive of Inverness Chamber of Commerce, said: “Almost every aspect of business finance is in negative territory, whether it be cash flow, profits, investment, bookings and orders.
“All of this is putting real pressure on Highland business owners who continue to strive to see a way through this and continued flexible and responsive support will continue to be required from both the Scottish and UK governments.”
Trudy Morris, head of Caithness Chamber said the Scottish Government needed to “urgently clarify” issues facing tourism and other sectors over the easing of restrictions.
