On February 16 the First Minister began outlining how she hoped to ease Scotland out of the CV19 restrictions which have been in place since December 2020.

If the removal of restrictions is not carried out successfully then the risks to businesses are enormous. As a result, it is important to understand how businesses viewed the previous roadmaps and frameworks designed to navigate the pandemic.

On November 2 Scotland entered a system of regionally specific restrictions known as ‘Scotland’s Strategic Framework’. Between November 2 and November 25 2020 we ran our Quarterly Economic Survey (QES) to understand how businesses were responding to this framework. Both the Aberdeen City and Aberdeenshire council areas were at Level 2 protection level during this time. We asked businesses about their general confidence as well as specific questions about their views on the Strategic Framework. We can now use that data to look back on circumstances prior to the enhanced lockdown and learn lessons about the way forward for our regional economy.

Compared with the first wave of the pandemic, circumstances for businesses in the region were improving towards the end of 2020. Just over half (53%) of those surveyed in Q4 reported that their cash flow has either increased or remained constant over the past three months. This is the first time since the pandemic began that the majority of respondents had not reported a decrease in cash flow over the previous three months.

When asked about investment plans for plant/machinery/equipment, around half (53%) of respondents stated that this had decreased over the past three months. Just under half (49%) said the same about investment plans for training. However, just over one in ten (11%) stated that investment plans over the past three months have increased, this was the highest proportion since the crisis began.

One third (33%) of Q4 2020 respondents stated that they believed their business’s turnover would improve over the next 12 months. This is around the same as in Q3 (34%) but up from around one in ten (11%) in Q2 2020. A significant minority (46%) said that they believed that their business’s turnover would worsen over the next 12 months, roughly the same proportion as in Q3 (45%). When asked about their business’s profitability over the next 12 months there was not much change in confidence from the findings in Q3. Just over a quarter (26%) believed that their business’s profitability would improve whilst just over half (51%) said that it would worsen.

Operating levels had increased since the start of the crisis. Almost a quarter (24%) of respondents reported that they were operating at full capacity. This is up from one fifth (20%) in Q3 and just over one in ten (11%) in Q2. The proportion of respondents reporting that their workforce decreased over the past three months had declined from over half (52%) in Q3 to less than two fifths (37%) in Q4. The proportion that expected their workforce would decrease over the next three months had also dropped significantly, down to 22%.

When asked about the Scottish Government’s Strategic Framework almost two thirds (64%) of those surveyed said that the framework provided their business with the clarity it needed. However, only one third (33%) said that the framework provided their business with the financial support it needed. Almost four fifths (79%) of respondents thought that the framework did not have a clear long-term exit strategy from restrictions.

A majority (96%) of respondents considered it either very or extremely important that restrictions are evidence based and targeted effectively. A similar proportion (92%) said the same about business support being aligned with severity of restrictions. Two thirds (66%) of respondents were either very or extremely concerned that business is not trusted to operate safely. An even higher proportion (70%) said the same about the lack of balance between health mitigation and economic recovery.

Much has changed since November 2020 but the need for current and up-to-date information on our regional economy has remained. With the Scottish Parliamentary election and UK Budget just around the corner it is vital that businesses in the North-east have the opportunity to share their current challenges and priorities so that the Chamber can campaign on their behalf.

The QES is now live for Q1 2021 and we are looking specifically at what will happen when government support for businesses comes to an end. Please take five minutes of your time to provide us with your valuable feedback. Take part here: http://bit.ly/AGCC-QES-2021Q1