One in four firms cut office space as home-working increases

Nearly 40% of firms expect a fall in business volumes in the coming months, according to the survey

More than quarter of Scottish firms say they are permanently cutting office space in response to increased home-working, a survey suggests.

But only a tenth of them say that home-working has helped productivity.

Half say it has worsened it, and more than half say it has made it more difficult to collaborate, to innovate and to manage staff.

The findings are from the long-running, quarterly Scottish Business Monitor, surveying around 500 firms.

It found 70% of tourism and hospitality firms surveyed expected to cut staffing in the next few months, and 20% of all firms.

'Weak performance'

However the survey, by the Fraser of Allander Institute, was carried out between 12 and 22 October, before the announcement that furlough is being extended to the end of March. That is expected to protect many such jobs.

Nearly 40% of firms reported being insecure or very insecure about their cashflow, as restrictions on business activity continue through winter. The same amount expect a fall in business volumes in the coming months.

Over the next six months, more than quarter of firms said they expect to operate at less than half their capacity.

The number of people working from home has increased dramatically during the coronavirus pandemic

Only 2% expected strong growth for the economy over the next year, while 82% of firms expect a weak or very weak performance.

The Scottish government was credited with having handled the health aspect of the pandemic crisis better than Downing Street.

But there was less support for Scottish ministers than Westminster ones for their understanding of the issues facing business.

'Turbulent period'

Professor Graeme Roy, director of the Fraser of Allander Institute, said it was unsurprising that the majority of businesses remain apprehensive "as we continue to navigate our way through a turbulent economic period".

He added: "The decision to extend furlough to March will clearly have been a great relief to many businesses and their employees.

"But the lateness of the announcement won't have helped many employees who will have been made redundant, particularly given that most businesses are predicting very weak growth over the next few months.

Tom Speirs, of Addleshaw Goddard - the law firm that sponsors the survey - had a more positive outlook.

He said: "Despite the general feeling of apprehension within Scottish business, a significant share of businesses feel secure about their finances and are not overly concerned about credit availability in the coming months.

"Although many organisations will have to make difficult decisions in the months ahead, we are optimistic that we will soon be working towards a robust recovery."