Think tank Scotianomics has carried out what is believed to be the most detailed survey to date of Scottish businesses (420 respondents) and the impact on them of the Coronavirus lockdown. I hope the breakdown by sector will allow you to tailor a story to best suit your part of the Highlands, with agriculture, forestry, fishing and tourism all particularly badly hit.
The findings are stark with 93% saying they have been adversely affected; 64% being forced to temporarily stop trading; and 61% worried that they will not survive once the lockdown is eased. The full report is attached as a PDF. It includes extensive results and analysis. The media release is attached and embedded below, along with a free-to-use photo of Gordon MacIntyre-Kemp.
61% of Scottish firms worried about post-lockdown survival
Think tank calls for national bank to back invoicing scheme to boost economy
A MAJOR survey of Scottish businesses has revealed the full impact of the Coronavirus lockdown – with confidence so badly damaged that 61% fear they will go bust, despite government support.
More than 400 companies, working across 17 broad sectors, took part in the survey. Results saw 93% stating they had been adversely affected by the pandemic, including 64% saying they had been forced to stop trading.
Two thirds (67%) admitted they could not survive without some combination of the Government’s Job Retention Scheme, which pays 80% of salaries for furloughed staff, and Holyrood’s Business Support Fund grants of £10,000 or £25,000. In total, 71% of respondents said they had not received grant payments.
The research was carried out by Scotianomics, the same think tank that hit the headlines last week with its interactive map showing the risk of COVID-19 across all of Scotland’s 354 council wards. In its latest research, the 21-question survey addressed the impact of lockdown to date and highlighted how confident businesses are about resuming trading after restrictions are lifted.
Worryingly, 61% of businesses say they fear their firms will not survive the crisis, despite the massive financial aid and stimulus package being poured into the economy by the government. Similarly, 74% say they anticipate difficulties resuming business activity after lockdown.
Those fears regarding the long-term future are believed to have influenced why only a small number of companies have applied for, or intend to apply for, government-backed loans. While 52% thought the loans were a good idea, only 11% had already applied. A further 11% said they intended to apply.
Gordon MacIntyre-Kemp, Director of Scotianomics, said the survey results made grim reading and called on the Scottish Government to take on board the findings and a list of six strategic recommendations to help shape the best possible chance of economic recovery.
He added: “After extensive analysis of the results, we have suggested a series of innovative and forward-thinking suggestions on how to rebuild Scottish business confidence.
“We are urging the Scottish Government to consider these very seriously. If they act on these suggestions, we believe Scottish business and the economy will snap back quicker and more effectively than in many other countries.”
One of the biggest impacts for businesses is that payments are being delayed between companies at every level. This is either because firms cannot afford to settle invoices, or are choosing not to, in an attempt to maintain cash reserves to meet future challenges that they may face.
Foremost among the Scotianomics proposals is that the Scottish National Investment Bank (SNIB), under the direction of the Scottish Government, should investigate the opportunity to offer a national invoice factoring service for businesses. Companies would hand over unpaid invoices to SNIB and be given a loan equal to a percentage of the outstanding amount.
Not only would that provide struggling businesses the security of working capital, it would also allow the publicly-owned bank to make a profit by charging a management fee, as well as fees for recovery of outstanding amounts.
Mr MacIntyre-Kemp added: “Nothing wrecks business confidence as thoroughly as seeing the payment process shattered throughout the entire supply chain. Without cash flow, businesses simply cannot operate. Without business confidence in the invoice chain, the economy will take an age to recover and investment will stall.
“As a nation, we should be thinking big. This kind of progressive move would inject cash into businesses exactly where it is most needed, while telling the world that the Scottish economy is up and running again. The fact that it could also build an excellent reputation and safeguard the long-term future of the SNIB would be an added bonus.”
The invoice factoring recommendation is one of six made by Scotianomics, the research company and independent think tank which conducted the survey. Among its other suggestions is that future help should be prioritised for the worst hit Scottish sectors, including agriculture, forestry and fishing; tourism; and arts, entertainment and recreation.
It has also urged the Scottish Government to buy and stockpile supplies of PPE, which can be sold to Scottish businesses to help them if there is a second wave of Coronavirus, or to help deal with other future infections.
Scotianomics offers data-driven analysis and risk assessment of significant opportunities or threats to the Scottish economy, aimed at business leaders, Government policy-makers and other economic decision-makers.
A full copy of the survey can be downloaded by visiting https://www.scotianomics.org/survey-of-businesses-to-establish-the-economy-wide-and-industry-level-impact-of-covid-19-in-scotland/
Issued on behalf of Scotianomics by Holyrood PR. Further information on firstname.lastname@example.org or from Scott Douglas on 07980 598 762