SCC: Economic recovery at risk as COVID concerns curtail business growth
Scotland’s predicted rapid return to pre-pandemic levels of economic growth has been put at risk as businesses report increased concerns over rising costs, recruitment challenges and concern over the return of COVID-19 restrictions, according to a new survey conducted by the Scottish Chambers of Commerce (SCC).
The SCC’s Quarterly Economic Indicator (QEI) for the fourth quarter of 2021 indicates that the strong growth and reported rises in confidence have been dampened by increasing cost pressures, caution over investment and employment and continued economic uncertainty caused by the prospect of increased restrictions.
The report highlighted that with inflation rising to 5.1%, its highest rate in 10 years, concern over the business impact increased across all sectors in the survey, reaching record highs. The financial and business services sector (FBS) reported a 17% increase from Q3.
Whilst the findings show a rise in business confidence, due to research being carried out prior to the reintroduction of restrictions in December, this is largely anticipated to have plummeted again.
Stephen Leckie, President of the Scottish Chambers of Commerce, said:
“Business confidence continued to rise in the past quarter, however, this remains highly volatile as the Omicron variant triggered the return of COVID-19 restrictions plunging Scotland’s businesses back into a spate of economic limitations and curtailments.”
He added: “As Scotland adjusts to ‘living and working with COVID-19’ and the threat of new variants, it’s vital that the Scottish Government develop an economic recovery plan, in collaboration with business, which allows the economy to reopen fully and ends the continuous threat of a return of restrictions, allowing businesses to make a comeback in the months ahead.
“Many businesses have had a tough winter and the rising cost of doing business is now also dragging on growth with increasing cost pressures for raw materials and goods driving down profitability. The intensifying inflationary pressures are a major concern for businesses, with rising costs of fuel, energy, raw materials and the removal of VAT and business rates reductions for hospitality and tourism increasing pressure on firms.”
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