SCOTLAND: End of Covid restrictions ‘kick-started’ Scotland’s economic recovery

SCOTLAND: The end of Covid-19 restrictions
in August kick-started Scotland’s economic recovery, a new report has found.

The
Scottish Chambers of Commerce (SCC) quarterly economic indicator report found
an increase in confidence across all sectors in the third quarter of this year.

However,
it also found businesses were still worried about inflation, tax and the energy
crisis driving up costs.

Tim
Allan, president of the SCC, said progress was still “under threat”.

He said:
“The survey results indicate that confidence and domestic sales are
generally strong across all sectors surveyed, with expectations in line with
improving economic forecasts that the Scottish economy should return to
pre-pandemic levels in the spring of 2022.

“However,
that progress is under significant threat with increasing concern over the
emerging energy crisis driving up business costs, inflation and taxation, the
cost of raw materials and shipping, all of which are fuelling uncertainty at a
time when businesses urgently need confidence and certainty to continue their
recovery from the pandemic.”

According
to the report, businesses are also worried about labour shortages, with all
sectors reporting difficulties in recruiting staff during the third quarter.

Mr Allan
said if Scottish businesses cannot get the staff they need, they risk
“falling dangerously behind” the curve on recovery and growth.

He called
on the Scottish and UK governments to “urgently” back businesses with
a clear economic plan and budgets focused on business recovery.

He added:
“It is business which is driving the rapid return to economic growth and
governments must stop adding upfront business costs and instead focus on
supercharging recovery by creating the right environment for businesses to
trade, invest and grow.”

Labour shortages ‘in many sectors’

Mairi
Spowage, director of the Fraser of Allander Institute which is in partnership
with the SCC, said the research signalled “an important boost in optimism
across the Scottish economy”.

However, she
added the end of furlough and the universal credit £20-a-week uplift could have a negative impact on top of emerging
labour shortages.

Last
month an HGV driver shortage led to problems for various industries from
supermarkets to fast food chains. Many petrol stations also ran out of fuel which prompted widespread panic
buying.

The UK
government introduced temporary working visas to tackle the problem, but
Scottish External Affairs Secretary Angus Robertson said the measure would not
help all UK sectors.

Ms
Spowage said: “It is unknown how many of the workers who were on furlough
at the end of September will become unemployed or unable to secure the type and
level of work they want.

“This
uncertainty coincides with the cancellation of the universal credit uplift
which will bring additional financial hardship to around half-a-million
families in Scotland.

“As
well as the risk of joblessness, labour shortages are becoming clear in many
sectors, threatening goods shortages and adding to wider inflationary
risks.”