Many mid-sized firms ‘could stop trading’ amid lockdown

More than a quarter of medium-sized businesses in Scotland are warning they could cease trading this quarter if restrictions do not ease, according to a new survey.

The new figures published by advisory firm BDO shows a continued shutdown could have major implications for the wider Scottish economy.

It comes the day after First Minister Nicola Sturgeon announced the country would remain in lockdown until at least the end of February.

Martin Bell, head of tax for Scotland at BDO, said: “We know we are likely to see the toughest lockdown restrictions stay in place for some time yet and the UK and Scottish governments have had to walk an incredibly difficult tightrope between protecting the UK’s businesses and shielding our health services throughout the course of this pandemic.

“The recent Scottish Budget announced some additional support and it is critical that the UK Budget in early March has some fundamental policies that help support mid-market businesses while the Government wrestles with the economic cost of the various support measures.

“History tells us that the rate of recovery of businesses of this size will play an important role in Scotland’s overall economic recovery.

“For most, the already rapid rollout of the vaccine cannot come soon enough.”

The survey shows 27% fear they could cease trading in less than two months if restrictions do not ease.

If they were to last a further three months into April, 83% say they would be at serious risk.

Medium-sized businesses feel much more optimistic about their longer-term prospects if restrictions are loosened ahead of spring.

BDO’s research found that 54% of Scottish businesses feel now is the right time to invest in their business.

In addition, 31% of firms feel they will return to pre-pandemic revenues once the strictest measures are lifted.

Restrictions which have been extended by the Scottish Government were introduced to save lives and protect the NHS from being overwhelmed by Covid-19.

The survey was conducted by Censuswide on behalf of BDO in January 2021. Fifty-two Scottish businesses responded.

A Scottish Government spokeswoman said: “No-one wants these restrictions in place a moment longer than absolutely necessary.

“Every decision we take has the objective of keeping the country as safe as possible, with as little harm to health – and to the overall economy – as possible.

“Since the start of the pandemic, we have allocated more than £3bn to support businesses – this is more than a third of overall Covid-19 spend.

“As the prevalence of the virus has increased, so has our support to business. We continue to look at how we can support businesses further, driven by business feedback, which is why we increased support by £225m in December to reflect the tighter restrictions in place and the need for sector-specific funding.

“Businesses also continue to benefit from non-domestic rates relief financed by the Scottish Government, in addition to the UK Government furlough scheme.”