13 Jan 2021
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
Throughout this crisis the Chamber movement has been explaining the consequences of repeated lockdowns on the likely survival of businesses and the livelihoods they support.
Companies responding to the most recent British Chambers of Commerce survey, 95% of which are SMEs, presented a deeply gloomy picture of their activities in the fourth quarter of 2020.
Unsurprisingly given the widespread re-imposition of rigorous lockdowns there were few signs of improvement compared to Quarter 3. More than four in ten firms reported further deterioration in cash flow and levels of investment remained historically low.
Suren Thiru, BCC’s Head of Economics confirmed “the services sector endured a particularly difficult quarter, with consumer-facing businesses most severely exposed to renewed restrictions”. Figures for the first quarter of 2021 are likely to take us back to the conditions we were experiencing in the spring of last year.
The Federation of Small Business added its survey evidence this week with the suggestion that as many as 250,000 small businesses are unlikely to survive the crisis. That would sadly be unsurprising because whilst the Job Retention Scheme and small monthly cash grants to the most damaged sectors are very welcome, they have never been sufficient to cover the monthly fixed overheads of so many businesses without steady income for over nine months.
The emergence of the more virulent variant does mean though that we are in a very different phase of the crisis.
Governments are scrambling to persuade the public to take the variant seriously and right now I believe businesses, whilst struggling mightily in many instances to stay afloat, are largely resigned to government strategy - heavy lockdowns to control the virus combined with the steady acceleration of vaccine distribution.
The comparatively faster progress in getting the vaccine out into the population is the one optimistic note.
At this moment, governments need to be supported by businesses as they tackle the new variant. This is not the time for disputes over the severity of the lockdown measures but it would equally be helpful if the UK Government and the devolved administrations made every effort to avoid disagreements over the nature and scale of the financial support being made available to businesses to help them survive.
The brief squabble over the availability of £375m of extra funding that the Chancellor promised to the Scottish Government and which turned out not to be new money is exactly the kind of disconnect between governments we do not need.
Equally whilst the top priorities for the governments must be navigating the NHS through winter and the speediest possible roll out of the vaccine, there must be some room for thinking ahead on the consequences for our economy and the potential loss of livelihoods. The most common question I am being asked by Chamber members is how long we think the lockdowns will last. The variety of expert opinions on how long we can expect restrictions to remain in place has been bewildering.
We have had Easter, late summer and in some cases over the winter and into 2022 all floated as options. That is making it well-nigh impossible for businesses to plan with any level of confidence.
Nor do we have much clarity on whether current business support measures such as the JRS, the current framework of regular cash grants, rates relief which should really also be available for closed businesses in 2021/22 or the continuation of VAT deferral will match the timetable for lifting restrictions.
Certainly some patience is needed whilst our governments regain control of the virus but let a planning dialogue with business be next on the agenda.
This article was first published in The Herald on Wednesday 13 January 2021