Third of Scottish small businesses may never reopen after coronavirus outbreak

A third of Scottish small businesses that have shut down during the coronavirus outbreak may never re-open, according to a survey by the Federation of Small Businesses (FSB).

The FSB survey of 5,471 UK small business owners, including 758 in Scotland, found that 53 per cent of Scottish firms had been forced to close since the beginning of the coronavirus outbreak, compared to 41 per cent on average across the UK.

Of those that have closed – both in Scotland and across the UK – 35 per cent are not sure whether they will ever reopen again.

According to the survey, nearly a fifth of Scottish businesses have either failed to make or struggled to make rent or mortgage repayments, while 71 per cent have furloughed staff.

Andrew McRae, FSB’s Scotland policy chair, said: “In the jaws of the crisis, a huge share of independent Scottish firms did the right thing, followed the official advice and shut their doors.

“Our new survey shows that many of these operators worry they’re closed for good.

“We’re certain however that with the right help from government, bigger businesses and the general public, we can ensure these fears aren’t realised.

“But this research does show that many local operators are on a knife edge.”

The research found that one of the things that would help businesses is more flexibility around furloughing workers, a policy that was announced by the UK Chancellor, Rishi Sunak, on Tuesday.

Seventy per cent of businesses said the ability to partially furlough workers would help them – with 46 per cent wanting to bring staff back gradually and 28 per cent saying that would keep their business viable.

McRae said: “When the time comes to begin to re-open, businesses won’t be able to go from nought to sixty overnight.

“For many employers, they’ll want to phase a return to test any new systems and to keep their staff safe.

“Allowing the partial furloughing of workers is a vital policy move that would allow many smaller firms to restart smoothly and sustainably.”

On Tuesday Rishi Sunak announced an extension to the furlough scheme by four months until October with employees continuing to receive 80 per cent of their salary up to £2,500, but from August companies will have to start contributing towards the cost of the scheme.

From August there will be more flexibility, with employers able to bring workers back part time to aid the transition.