Scottish Business Monitor: findings by sector

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Last week, we published the results for our latest Scottish Business Monitor, a survey of Scottish businesses, published in partnership with Addleshaw Goddard.

The survey provided a stark illustration of the economic cost of the COVID-19 shutdown. Nearly 90% of the businesses that we engaged with had seen their turnover negatively impacted since the start of the crisis. Over 80% said the number of hours staff are working have also been negatively impacted.

In this blog, we provide an overview of the experience within different sectors of the Scottish economy.

Business conditions by sector

The shutdown in the economy is having an impact across all major sectors of the Scottish economy.

The chart below shows the split in our survey responses by sector in response to questions asked about staffing levels.

Chart: Percentage of businesses stating that their staff numbers / hours have been negatively impacted due to the Coronavirus, by sector

Chart 1

As the chart highlights, all sectors have been severely impacted by the crisis in terms of their staffing levels (either through direct changes in employment or through government supported furloughing schemes). But the harshest impacts have occurred in accommodation & food services. As we highlighted in our March Commentary, this sector – which includes key aspects of our tourism sector – are at the front-line of this crisis. All of the firms that we spoke to had reduced their staff hours in manner. A huge number (77%) had reduced staff numbers.

On the whole, firms have responded by cutting staff hours much more significantly than staff numbers, suggesting that firms are trying to retain what they can of their workforce through the temporary shutdown (albeit working at reduced capacity). The gap, again unsurprisingly, is the greatest in construction with its highly flexible working model.

One other stark finding we find for construction is that 95% of firms reported that their business supply chain has been impacted, making it more difficult to get supplies to undertake their building work. Other badly impacted sectors in terms of their supply chains were retail & wholesale (89% of firms) and manufacturing (89% of firms).

In such times, cash is king. As many businesses struggle with drastically reduced demand they rely upon what cash they have saved, or can raise in the short-term, to survive.

Chart: Percentage of businesses stating that their cash flow has been negatively impacted due to the Coronavirus, by sector

Chart 2

Once again, the results for the accommodation and food services sector are staggering, with all businesses seeing their cash flow being negatively impacted by the crisis.

Of course, the link between cash flow and business survival is high. Of firms who responded to the question, 73% of firms within the accommodation & food services sector said that their firm could survive less than 3 months under current levels of trading (even accounting for non-responses, this figure was still 58%).

Chart: Percentage of responding businesses stating their business can survive less than three months under current levels of trading, by sector

Chart 3

In summary, these slightly more detailed results of our Scottish Business Monitor paint a further sobering picture of the scale of the economic crisis that we now face. In time, this is a challenge that will impact upon all aspects of our economy. But the risks facing the accommodation and food services sector cannot be overstated.

April 16, 2020