The immediate impact of COVID-19 continues to rock the economy. The most recent ONS survey at the time of writing sees almost a quarter of businesses in Scotland reporting that their turnover has declined by over 50%.
The British Chambers of Commerce COVID-19 Impact Tracker also highlights that cash flow is extremely challenged; and there continues to be a real risk that our region could feel the impact disproportionately. Research from the Centre for Cities illustrates that Aberdeen has one of the highest percentages of jobs exposed to the immediate impact of COVID-19, with only Crawley, Luton and Derby ranking higher.
Outside of the ongoing impact, in June’s monthly economic briefing, the Scottish Government’s chief economic adviser noted that if the recovery follows the more gradual path outlined in their scenario planning, the economy is unlikely to return to pre-crisis levels until the beginning of 2023.
These bleak statistics show that as governments across the UK begin to look to recovery, there’s never been a clearer need for the business community to be active in driving the conversation. Forums such as the advisory group on economic recovery brought together by the Scottish Government, and the themed working groups convened by the UK Government, present critical opportunities to do this.
In our discussions with members some clear priorities have started to emerge. Firstly, that this crisis represents a real opportunity to accelerate our ambitions to protect the climate. Ramping up our aims to hit net-zero targets will be a national effort which the North-east can lead. Ensuring that low carbon infrastructure investment is prioritised, that policymakers leverage the skills and talent present in our region to advance plans around CCUS and the hydrogen economy, and that the promised sector deal allows the oil and gas industry be a vital enabler of these plans are all points continually reflected in our ongoing conversations with members and government.
Secondly, the recovery needs to be seized on to make transformative changes to the systems that underpin our economy. As an example, the welcome business rates reliefs necessary to protect firms and support employment have taken £875m out of the system this year. Failing to seriously review the rates burden won’t just restrain the private sector recovery, it’ll impact on public sector finances too. We need to take this time to strip out barriers to recovery, with a particular focus on removing upfront costs which are going to damage the ability of businesses to restart and keep our public services strong and well-funded.
Third - that there will be some need for specific, sustained sectoral interventions further into the future. The most important thing is clearly getting firms back to work safely as rapidly as possible but key sectors for our region, such as hospitality, face a prolonged recovery which will necessitate targeted support. With economy-wide schemes like the CJRS now in the process of tapering off, government need to ensure that support is targeted to the regions and sectors that have felt the brunt of lockdown the hardest.
There’s no ignoring the fact there are real challenges ahead but as one of the most adaptive, resilient regions in the UK, we’ve got a track record of genuinely innovating in response to economic adversity. In other words, we know first-hand that there’s a difference between forecasts and foregone conclusions.
This crisis will cause many to constrain their future plans but there's also a real opportunity to accelerate our long-held future ambitions and protect our economy. The Chamber will be doing all we can to deliver the latter.