Medium-sized businesses struggle as lockdown restrictions continue
Our latest Rethinking the Economy data shows how lockdown is taking its toll on medium-sized businesses, with more than a quarter (27%) warning that they could cease trading in less than two months if restrictions do not ease. If the current lockdown lasts a further three months into April, 83% say they would be at serious risk.
- More than a quarter (27%) of mid-sized Scottish businesses say they will struggle to continue trading if the strictest restrictions continue for a further two months
- Medium-sized companies across Scotland have taken on an average of £5m in extra debt as a result of Covid-19, with more than half (56%) claiming they are unsure if they will be able to pay it back under current funding arrangements
While the health implications of lifting lockdown restrictions too early will understandably be the primary concern of Government, the new figures, show that a continued shutdown could have major implications for the wider Scottish economy.
Medium-sized businesses across the UK generate £1.4 trillion in revenues each year and provide one in four jobs, according to our analysis, making them a critical part of any post-pandemic recovery.
The research also identified that mid-tier companies in Scotland have borrowed an average of £5 million per business as a direct result of the pandemic, with more than half (56%) unsure that they will be able to pay back their loans under the current funding arrangements. Forty six per cent of Scottish businesses feel there should be greater support for apprenticeships and re-skilling workers with 23% stating they believe the Government should extend repayment terms on COVID-19 loans.
Martin Bell, head of tax for Scotland at BDO LLP, 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 roll-out of the vaccine cannot come soon enough.”
View the full set of survey results here.