Call for VAT cut

‘Survival’ now the key factor for many businesses

Tim Allan

Tim Allan: ‘government must work productively with businesses’

Scottish business leaders have issued a new call for a cut in VAT and sustained government support after declaring their main priority is surviving the coronavirus lockdown.

Commenting on the Scottish Chambers’ latest quarterly economic indicator, Tim Allan, president, says the results are the worst in the 30-year history of the survey.

In a stark warning to government, he says: “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.”

The survey of the second quarter in partnership with the Fraser of Allander Institute, confirms that construction, retail & tourism were most affected by the crisis.

These results are among the worst over the 30-year history of the survey

– Tim Allan, Scottish Chambers

Mr Allan says: The tourism and wider hospitality sector has suffered heavily, placing the sector into hibernation throughout the lockdown period. These issues as well as the increased costs firms will face to re-open safely, and reduced customers in any scenario, places the sector firmly in the danger zone.

“The UK Government must immediately reduce the rate of VAT on hospitality and tourism services including accommodation, food, beverages and visits to attractions to boost activity and consumer confidence.

“The current physical distancing guideline of two metres is having major implications on businesses to restart viably therefore an urgent decision from Scottish Government to reduce physical distancing from 2 metres to 1 metre is essential to support recovery.” 

Noting a cross-sector fall in confidence, Mr Allan adds: In many instances, these results are among the worst over the 30-year history of the survey.

lock on gates at bar

Many bars are close to failure (pic: Terry Murden)

“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.

“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.”

Professor Graeme Roy, director at the Fraser of Allander Institute, added: “This latest survey from the Scottish Chambers of Commerce presents a sombre picture of the scale of the challenge now facing the Scottish economy.

“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.’’

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