Chambers issues ‘winter warning’ for economy
Retail has struggled through the pandemic (pic: Terry Murden)
The Scottish economy faces significant risks this winter from a combination of weak demand, declining government support and potential tax rises , according to the Scottish Chambers of Commerce.
The latest Quarterly Economic Indicator confirms the economy showed only weak signs of recovery where a return to trading was allowed as Covid restrictions were lifted.
Chambers president Tim Allan says: “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 shut down.
“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.”
Report co-author Professor Graeme Roy, director at the Fraser of Allander Institute, said: “The stop-start nature of our progress through this crisis is adding to the uncertainty and imposing its own additional cost on businesses.
- On business confidence: Signs of fragile confidence emerged in some areas of business although this was compared to historic lows from the previous quarter when lockdown conditions prevailed. Trends remain significantly negative across most indicators when compared to pre-COVID-19 conditions.
- On employment: Employment levels remain on negative trends across all sectors while risk remains that unemployment is set to rise significantly due to continued restrictions and reduction in employee support.
- On sales and revenue: Around a third of construction and manufacturing, four in ten retailers and more than half of tourism firms anticipate a further reduction in sales in Q4.
- On business concerns and cost pressures: The number of financial and business services companies reporting concern about rising taxation is the highest on record for the survey.