Scotland cannot afford to lose more of its crucial economic engine room after a swathe of smaller firms vanished from the scene during the Covid crisis, a leading business group has warned.
The gloomy Christmas message is from the Federation of Small Businesses (FSB) and highlights the damage already done to small and medium-sized enterprises (SMEs) north of the border.
The only thing we can predict with some confidence is that things are set to get worse before they get better.”
Andrew McRae, FSB Scotland.
It is the ability of SMEs to stay afloat in the most challenging of circumstances that will likely dictate the future pace of growth or decline of the nation’s economy.
According to banking giant NatWest, accelerating SME recovery can deliver a £140 billion boost to the UK economy.
FSB Scotland policy chairman Andrew McRae said: “This has not been a year on which many will look back fondly.
“Just as we thought we were looking at a tentative economic recovery, Omicron has pulled the rug from us.
“For a second Christmas in a row, local and independent traders face huge uncertainty about what the year ahead holds.
“The only thing we can predict with some confidence is that things are set to get worse before they get better.”
Mr McRae added: “The new rules curtailing large gatherings and sporting events coming into force on Boxing Day will have an inevitable knock-on effect across the economy.
“The return of physical distancing in hospitality and retail on Monday will make it very difficult for smaller businesses to welcome enough customers to trade at a profit – bad news for them and their suppliers.
“The challenge for 2022 will be to deal with the immediate crisis, while not losing sight of the longer-term, bigger prize – building a fairer, more resilient and more sustainable Scotland on the other side of this pandemic.”
Firms not short on ‘drive or ideas’
Smaller firms have a crucial role to play in this work, He said, adding: “They’re certainly not short of drive or ideas.
“The resilience and tenacity of Scotland’s small business and self-employed community has been nothing short of remarkable.
“Over the last two years, we’ve seen businesses pivot to new ways of working, explore new markets, and engage with their suppliers and customers in ways they would never have thought of before Covid hit.
“Local firms have continued to be the glue that’s helped bind communities together.
“As restrictions were eased, the re-opening of businesses like childcare providers, hairdressers, eateries and shops demonstrated just how vital these firms are to the success of our towns, cities and local economies.”
Local firms have continued to be the glue that’s helped bind communities together.”
But, to play their part, small businesses need to be “still in the game”, Mr McRae warned.
He added: “Sadly, official figures show there are now 20,000 fewer Scottish enterprises than there were at the start of the crisis.
“We can’t see more of the very businesses we’re relying on to trade us into a happier new year fail due to circumstances way beyond their control.”