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Highland business confidence drops as pandemic effects take hold


By Calum MacLeod

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Charlotte Wright, chief executive of HIE.
Charlotte Wright, chief executive of HIE.

A SURVEY of more than 1000 businesses across the Highlands and Islands shows a marked decline in confidence in Scotland’s economic outlook but continued belief among most firms in their own future.

The survey was commissioned by Highlands and Islands Enterprise (HIE) and carried out in June. This wave of the survey focused on impacts of and responses to the coronavirus pandemic.

It showed that 79 per cent of respondents reported their confidence in the economic outlook in Scotland had decreased in the past six months.

This is the most marked decline in the 16 business panel surveys HIE has commissioned since 2014.

Disruption to trade, decline in sales, loss of income, and furloughed employees were reported as some of the main impacts of Covid-19. Overall, 85 per cent reported they had experienced a decline (61 per cent) or no sales at all (24 per cent), while a very small proportion (four per cent) reported an increase in trade.

Nearly half (49 per cent) of firms had been able to continue operating throughout the lockdown and a further 12 per cent had reopened after closing initially.

Businesses that continued trading had to adapt. Making processes more efficient (50 per cent), exploring new domestic/UK markets (48 per cent) and improving competitiveness (44 per cent) were the most frequently reported actions taken.

Others include collaboration, changing products or services and moving products and services online.

Of those who continued or had restarted trading, 65 per cent said business was below the pre-pandemic level, 26 per cent much the same and eight per cent above.

Three quarters (75 per cent) believed their businesses will still be viable in six months’ time. More than two thirds (70 per cent) had applied for support and 91 per cent of those had received assistance.

Most businesses (71 per cent) said they were confident they can access the financial resources they need to get through the crisis and 87 per cent were confident they would be able to adhere to government guidelines when emerging from lockdown.

At the time of the survey, 72 per cent had already taken appropriate safety measures. Other measures taken included changes to workplace layout (38 per cent), staff training (35 per cent), reviewing staff requirements (31 per cent) and enabling staff to work from home (37 per cent).

Looking ahead, firms reported both concerns and potential opportunities.

The main concerns for the next six months were economic downturn (61 per cent), future waves of coronavirus and lockdown (55 per cent), and sustainability of the business (25 per cent).

Reported opportunities centred around adapting products or services (26 per cent), changing customer behaviour or preferences (26 per cent) and growing an online presence (26 per cent). Others include targeting new markets (25 per cent), using technology differently (22 per cent), and repositioning the business (15 per cent).

Throughout the lockdown, staff at HIE have been home working, while the agency has reshaped its priorities to help meet the changing needs of the region’s businesses and communities.

A major focus has been on helping distribute Scottish Government support such as the Creative, Tourism and Hospitality Enterprises Hardship Fund, the Pivotal Enterprise Resilience Fund and the Supporting Communities Fund. Together these have brought millions of pounds to the Highlands and Islands.

HIE chief executive Charlotte Wright said: “We are, as always, extremely grateful to everyone who took part in the survey. The feedback they have provided is helping to assess the different ways in which Covid-19 has been affecting the region’s economy. It will form part of the region’s voice, feeding into the national picture and help inform future policy and support as we work on recovery.

“As expected, the survey shows there have been many severe impacts across the Highlands and Islands and the road to recovery is a long one.

“In that context, the high success rate among those who applied for government support is encouraging, and suggests the additional funding is being targeted effectively and making a real difference.

“We particularly welcome the confidence that many firms have in their own future and that they expect to have the resources they need to get through the crisis. This is typical of the prevailing can-do optimistic attitude of so many in the region; qualities that will be vital in rebuilding the economy.”

HIE’s business panel survey reports are available online at hie.co.uk/research-and-reports. The next wave of the survey is due to take place in October.



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