Reports from the BCC, Scottish Government Chief Economist and Fraser of Allander Institute highlight the fragility of the economy
Tuesday, 6 October 2020
The latest Covid restrictions are only a few weeks old and already the media is awash with stories of an impending ‘Circuit Breaker’. This comes as recent reports from the British Chambers of Commerce, the Scottish Government’s Chief Economic Advisor and the Fraser of Allander Institute have all reached broadly the same conclusion: the economic recovery we have seen since the national lockdown began to be eased in the early summer is very fragile and the imposition of further restrictions to tackle the spread of Covid risks further economic damage.
Commenting on the reports, Alan Mitchell, Chief Executive of Fife Chamber of Commerce, said: “Business people understand the health challenge posed by coronavirus and they know that their activities will have to be curtailed as part of the strategy to combat it. But the restrictions that are imposed need to be based on evidence, targeted and proportionate. At the moment, few businesses have confidence that this is what is happening.
“The vast majority of businesses that have been open for trade in the last few months have kept their staff and their customers safe while doing so, yet Scottish manufacturers are still subject to 2 metre social distancing and non-essential offices are still not allowed to open.
“Hospitality businesses that have worked so hard to create a covid-safe environment have seen their financial viability threatened by the imposition of the 10pm curfew, the effectiveness of which has been questioned in many quarters. And now they, and other businesses, have the threat of more restrictions or temporary closure hanging over them.
“Other countries have managed to introduce airport testing regimes that have allowed people to travel with greater confidence while the UK still relies on the blunt instrument of quarantine.
“The most recent financial/economic support package from the Chancellor is much less generous than the existing provisions and falls far short of what is available in other countries. Packages for companies that are affected by local restrictions have, thus far, fallen far below what is needed.
He concluded: “We all need to be worried about our economy: when it gets sick, so do people. With pre-covid levels of economic and business activity potentially years away, a surge in business closures and unemployment over the next year is inevitable without decisive action. If that happens, the consequences will be with us for a long time in the form of less national income, government tax revenues, business investment and employment, public spending and future funding for vital public services. This will harm everyone.
“We all recognise we have to live with Covid for some time to come and that means shared compromise and sacrifice. But it also means greater clarity, consistency and certainty of messaging and policy, and greater attention to our economic wellbeing and future than we have seen so far.”
British Chambers of Commerce Quarterly Economic Survey: UK sales decrease
Fraser of Allander Institute: Scotland’s s economy at a crossroads
Scottish Government State of the Economy report: Economy recovering but fragile