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Firms face a ‘reckoning’ as furlough nears end

Victoria Street

A lack of tourists has left firms to ponder their future (pic: Terry Murden)

Scotland’s tourism, hospitality and retail companies are facing a “reckoning” as they decide whether they can continue to trade, according to a new survey.

Firms are “doing their utmost to retain staff” amid high levels of concern over the risk of further lockdowns and the imminent withdrawal of government support.

Three quarters (74%) of firms expect to retain their staff in the next three months. However, this reduces to 68% as the Treasury’s furlough scheme comes to an end in October, the survey by Scottish Chambers of Commerce reveals.

It follows survey of 7,400 employers conducted by the British Chambers of Commerce in July which found that 29% expect to cut the size of their workforce before the furlough scheme ends.

Liz Cameron, Chambers chief executive of the Scottish Chambers, said: “We fear a reckoning as some companies, particularly in tourism, hospitality and retail decide it is no longer viable to restart or continue in the coming months. 

“For those sectors which remain closed or have just resumed operations recently, helping them back to work and restoring consumer confidence as quickly as possible is crucial to their immediate survival.”

Liz Cameron

Liz Cameron: ‘need for tailored support’ (pic: Terry Murden)

Her comments came as another high profile restaurant business announced it was closing because of a lack of tourists. Cafe Truva opened in Edinburgh’s Royal Mile in 2008 to serve a Turkish and Mediterranean menu. It follows the closures announced by Hendersons, Castle Terrace and the National Museum Tower restaurants.

Dr Cameron continued: “There is a need for more direct fiscal support in the form of targeted sectoral interventions for those businesses most at risk as well as targeting regional areas where the impact of the virus has hit harder than in others.

“We must also see tailored support to meet the need of businesses at an increasingly individual level.

“Scottish businesses have already demonstrated that we are adaptive, innovative and resilient, but the challenges we face over the next few months, potentially years, warrants a response from government that is just as substantial.”

Call for repayment extension

Consumer group Which? has called on Britain’s Financial Conduct Authority to extend loan repayment holidays and interest-free overdrafts until 31 January to shield millions of households from severe financial distress when the reliefs end in October.

The non-profit organisation said the temporary measures had provided critical aid to families and individuals grappling with the economic fallout of the COVID-19 pandemic, and demand for such support will surge after a nationwide job retention scheme ends on Oct. 31.

Research conducted by Which? in July showed workers placed on furlough were three times more likely to have defaulted on at least one payment in the last month.



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