The SCC’s Quarterly Economic Indicator (QEI) for the second quarter of 2021 indicates more positive growth across all sectors surveyed, albeit, caution is still the watchword for many businesses.
- Pent up demand unleashed: All sectors have reported substantial rises in confidence and domestic sales, owing to the easing of general and domestic travel lockdown restrictions. Most results are positive for the first time in over a year, albeit from historically low bases.
- Caution looking ahead: All sectors have projected positive expectations for Q3, on balance, likely boosted by the expected further easing of lockdown restrictions. While firms are optimistic about sales revenue, they are more cautious around investment and staff levels with most firms envisaging no change to these in Q2.
- Faltering export sales: Covid-19 disruption and Brexit fallout has resulted in trading difficulties for businesses in services, manufacturing and retail as evidenced by falls in export sales and orders across these sectors.
- Inflation pressures: All sectors have recorded increases in concern over inflation, which may escalate as more consumers spend savings accumulated over the last 16 months and create uncertainty for businesses in terms of their costs and prices.
- Flat labour market: Most sectors saw a slight increase in employment, apart from retail, which saw no change over the quarter. Most firms, across all sectors, expect little change in Q3 which could result in sluggish jobs growth, with further challenges expected as the furlough scheme is withdrawn.
Tim Allan (President of the Scottish Chambers of Commerce) said: “We have recorded the first shoots of growth returning to our economy, and it is essential now that both the Scottish and UK Government’s do all that they can to stimulate demand and boost confidence in the coming months. Priority must be given to continuing the provision of targeted financial support where it is needed most and looking ahead, both Governments must create the right environment for businesses to get back on their feet, create jobs and trade successfully again.”
Commenting on the results, Mairi Spowage (Director at the University of Strathclyde’s Fraser of Allander Institute) said: “Recent announcements of the delay to the restrictions roadmap will lead to calls from some sectors that there should much more extensive business support to get them through to a position where they can properly operate. As well-meaning as initiatives like a new Council for Economic Transformation may be, practical policy measures to help these businesses survive through the winter are likely to be needed.”
Source: Scottish Chambers of Commerce