BDO: Scotland’s medium-sized businesses struggle as lockdown restrictions continue
New data released today by BDO shows how lockdown is taking its toll on medium-sized businesses, with more than a quarter (27%) warning that they could cease trading in less than two months if restrictions do not ease.
If the current lockdown lasts a further three months into April, 83% say they would be at serious risk.
While the health implications of lifting lockdown restrictions too early will understandably be the primary concern of Government, the new figures published today by accountancy and business advisory firm, BDO, show that a continued shutdown could have major implications for the wider Scottish economy.
Medium-sized businesses across the UK generate £1.4 trillion in revenues each year and provide one in four jobs, according to BDO’s analysis, making them a critical part of any post-pandemic recovery.
BDO’s research also identified that mid-tier companies in Scotland have borrowed an average of £5 million per business as a direct result of the pandemic, with more than half (56%) unsure that they will be able to pay back their loans under the current funding arrangements.
A total of 46% of Scottish businesses feel there should be greater support for apprenticeships and re-skilling workers with 23% stating they believe the Government should extend repayment terms on Covid-19 loans.
Martin Bell, head of tax for Scotland at BDO LLP, said: “We know we are likely to see the toughest lockdown restrictions stay in place for some time yet and the UK and Scottish Governments have had to walk an incredibly difficult tightrope between protecting the UK’s businesses and shielding our health services throughout the course of this pandemic.
“The recent Scottish Budget announced some additional support and it is critical that the UK Budget in early March has some fundamental policies that help support mid-market businesses while the Government wrestles with the economic cost of the various support measures.
“History tells us that the rate of recovery of businesses of this size will play an important role in Scotland’s overall economic recovery. For most, the already rapid roll-out of the vaccine cannot come soon enough.”
However, if restrictions are loosened ahead of spring, medium-sized businesses feel much more optimistic about their longer-term prospects.
BDO’s research found that 54% of Scottish businesses feel now is the right time to invest in their business. In addition, 31% of Scottish businesses feel they will return to pre-COVID-19 revenues once the strictest restrictions are lifted.