End of Covid restrictions 'kick-started' Scotland's economic recovery

Businesses have more confidence now that Covid restrictions have ended, according to a report

The end of Covid-19 restrictions in August kick-started Scotland's economic recovery, a new report has found.

The Scottish Chambers of Commerce (SCC) quarterly economic indicator report found an increase in confidence across all sectors in the third quarter of this year.

However, it also found businesses were still worried about inflation, tax and the energy crisis driving up costs.

Tim Allan, president of the SCC, said progress was still "under threat".

He said: "The survey results indicate that confidence and domestic sales are generally strong across all sectors surveyed, with expectations in line with improving economic forecasts that the Scottish economy should return to pre-pandemic levels in the spring of 2022.

"However, that progress is under significant threat with increasing concern over the emerging energy crisis driving up business costs, inflation and taxation, the cost of raw materials and shipping, all of which are fuelling uncertainty at a time when businesses urgently need confidence and certainty to continue their recovery from the pandemic."

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According to the report, businesses are also worried about labour shortages, with all sectors reporting difficulties in recruiting staff during the third quarter.

Mr Allan said if Scottish businesses cannot get the staff they need, they risk "falling dangerously behind" the curve on recovery and growth.

He called on the Scottish and UK governments to "urgently" back businesses with a clear economic plan and budgets focused on business recovery.

He added: "It is business which is driving the rapid return to economic growth and governments must stop adding upfront business costs and instead focus on supercharging recovery by creating the right environment for businesses to trade, invest and grow."

Labour shortages 'in many sectors'

Mairi Spowage, director of the Fraser of Allander Institute which is in partnership with the SCC, said the research signalled "an important boost in optimism across the Scottish economy".

However, she added the end of furlough and the universal credit £20-a-week uplift could have a negative impact on top of emerging labour shortages.

Last month an HGV driver shortage led to problems for various industries from supermarkets to fast food chains. Many petrol stations also ran out of fuel which prompted widespread panic buying.

The UK government introduced temporary working visas to tackle the problem, but Scottish External Affairs Secretary Angus Robertson said the measure would not help all UK sectors.

Ms Spowage said: "It is unknown how many of the workers who were on furlough at the end of September will become unemployed or unable to secure the type and level of work they want.

"This uncertainty coincides with the cancellation of the universal credit uplift which will bring additional financial hardship to around half-a-million families in Scotland.

"As well as the risk of joblessness, labour shortages are becoming clear in many sectors, threatening goods shortages and adding to wider inflationary risks."