A majority of Scottish firms are feeling more optimistic about their expected volume of business over the next six months, according to a new survey.
The latest Addleshaw Goddard Business Monitor report – produced in partnership with the University of Strathclyde’s Fraser of Allander Institute – suggests sentiment has improved since the last quarter of 2020 despite challenges posed by the coronavirus pandemic and trade lost due to Brexit.
More than 500 Scottish firms responded to the survey, and 89% said they are confident their chance of survival over the next six months is somewhat or very likely – up from 79% in the previous survey – with 25% expecting a positive year, compared to 8% in the previous quarter.
However nearly two-thirds (64%) of businesses which trade with the EU reported a negative impact and just 3% recorded an increase in activity since the end of the transition period.
Mairi Spowage, director at the Fraser of Allander Institute, said: “As the country starts to emerge from a sustained period of lockdown, it is evident that this is a catalyst for the increased levels of optimism across all sectors.
“The hospitality and accommodation sectors have been two of the hardest hit throughout the pandemic, but we must take hope in that sentiment and expected level of business within these groups have improved over the next six months.
“Despite the increase in positive sentiment, we shouldn’t be disillusioned to think the economy will return to pre-pandemic levels quickly.
“We are still contending with the fallout of Brexit which has created negative trading conditions for firms across the board. These challenges are likely to have a long-term impact.
“However, generally we can remain confident that this will not hinder progress towards a strong economic recovery.”
The accommodation and hospitality sectors continue to have the lowest sentiment of all sectors even with a slight improvement of expectations, with 69% of firms expecting an increase over the next six months.
Many businesses said homeworking has caused issues in performance managing staff, productivity, workplace innovation and organisational culture – but 27% of firms plan to permanently reduce their office footprint.
On average, the survey found a majority of firms expect to operate between 76% and 100% normal capacity over the next six months, with double the number expecting to operate at more than normal levels of capacity on the previous quarter.
It also found an increasing divergence between sectors which are consumer facing, and therefore likely to be experiencing restrictions, and the sectors which are not.
There are now more firms reporting growth in their sales than firms experiencing a decline, in the manufacturing, construction, finance, business admin and other services sectors.
Alison Newton, partner and co-head of Real Estate at Addleshaw Goddard, said: “The last 12 months have been hard for many sectors across the country, without doubt, but it’s clear that more and more businesses are regaining confidence in regard to expected activity and employment levels.
“What’s difficult to see is that many businesses across Scotland are having to downgrade their workspace requirement whilst essentially acknowledging that will have a negative impact on performance.
“Of course, some will have had a depressed or uncertain income over a year now, so who can blame them; they’re simply doing what they need to do to survive.
“I think over the coming months we’re going to see a surge in more compact but higher quality workspaces, with both landlords and occupiers thinking hard about how they can not only drive productivity, but create places that promote health, wellbeing and sustainability.”
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