Scots Govt must ‘reset its relationship’ with business

Scottish Chambers of Commerce (SCC) president Tim Allan warned on Wednesday that the Scottish Government must “reset its relationship with business” so that Ministers are speaking “the same language of growth, jobs and economic prosperity.”

The latest quarterly survey led by the SCC said businesses in Scotland are at a crossroads “as they take stock of the damage caused by the pandemic and face significant hurdles on the way to economic recovery.”

The SCC’s Quarterly Economic Indicator (QEI) for the first quarter of 2021 completes a full year of measuring the effects of lockdown on businesses “and the damages it has inflicted on all aspects of business including employment and investment and identifies continued fears for the future.”

The report said lockdowns have had different effects depending on sectors.

“The worst performing sector in the survey was retail, which spent most of the quarter in lockdown with optimism and sales having collapsed,” said the SCC.

“Tourism businesses were feeling a bit more positive about the potential for the removal of lockdown conditions and welcoming the prospect of return of domestic visitors.

“However, significant numbers of businesses in the sector continued to report cash flow declines in the quarter 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 businesses in the construction industry also remained subdued as costs have spiralled, although the contracts pipeline remained in positive territory.”

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 program, highlighting the resilience of those that have survived the pandemic.

“However now is not the time to drop the ball – ensuring businesses remains on solid ground will be critical.

“Governments new and not so new must commit to this and give them the best possible deal if we are to create jobs and return to sustainable growth.

“Ahead of the elections, SCC has called on Scottish Ministers to pass a Business Growth Act within the first 100 days of the government to address the most urgent issues facing businesses right now, including reducing upfront business costs, boosting international trade and upskilling our workforce.

“Fundamentally, we need Scottish Government to reset its relationship with business so that Ministers are speaking the same language of growth, jobs and economic prosperity.”

Mairi Spowage, Director at the University of Strathclyde’s Fraser of Allander Institute, said: “Of course, the economic backdrop sets the scene for a very different election campaign in the next month or so in the run up to 6th May.

“The next five years holds a lot in store. Economic fortunes in the next year will be influenced heavily by Covid (again) and there could be considerable pain still to come once government support starts to be removed.

“This could see GDP falling again over the course of the year and expectations are that unemployment will rise.

“There is little doubt that getting the private sector back on its feet is an important cog in the wheel that will move us forward.

“Any future government activity in this area will need to be flexible and responsive and credibility and focus will be required in helping the private sector navigate its way out of this crisis with as many good quality jobs intact as possible.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.