IF any more evidence was needed, what has become ever clearer this week is that things are going to become much worse for so many businesses and households before they get better, even though coronavirus vaccine success signals a clear way forward.
The Scottish Government this week announced that 11 local authorities in west and central Scotland would from today at 6pm move into tier-four restrictions. This will see these parts of Scotland have similar restrictions to those put in place throughout England by Boris Johnson from November 5, with many businesses having to close their doors temporarily once more.
Although all of Scotland has for a fortnight been able to avoid the full lockdown implemented in England, the disappointment of businesses in response to First Minister Nicola Sturgeon’s announcement that large parts of the economy north of the Border will be hit with tier-four restrictions is understandable.
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That is not to say a tightening of restrictions is not necessary – the coronavirus death tolls make for grim reading again and saving many thousands of lives must remain the priority in Scotland, the rest of the UK and elsewhere.
There will inevitably be debate about where the virus spread is coming from, and the precise measures.
However, a poll for BBC Scotland by Ipsos MORI published this week signals people north of the Border believe the Scottish Government is handling the pandemic much better than the Boris Johnson administration.
Only 25 per cent of the 1,037 Scottish adults questioned said they think the UK Government has handled the pandemic well, while 55% believe it has done badly on this front.
Around 72% of those questioned think the Scottish Government has done well and just 15% believe it has handled the situation badly, while 12% say it has done neither well nor badly and the remainder did not know.
Meanwhile, 74% of respondents believe Ms Sturgeon has handled the pandemic well. Only 19% think Prime Minister Boris Johnson has handled the crisis well.
All of this will likely be cold comfort for many businesses and households north of the Border affected by the latest lockdown, albeit one that Scotland has been able to hold off on for longer than England. It must be noted the situation south of the Border has appeared at times shambolic, with mixed messages in recent months including Mr Johnson’s later-abandoned drive to get people back into offices in late summer.
One crucial requirement now, on the economic front, is that businesses throughout the UK already struggling for survival must receive adequate support to keep going until we emerge from this dark tunnel.
The UK Government’s coronavirus job retention scheme has thankfully now been extended until March. But it should have been in place until then and beyond from the outset, to provide the certainty businesses and households need.
The Conservative Government’s failure to do this, with Chancellor Rishi Sunak having said repeatedly he would not extend it at all right up until the second English lockdown was announced on October 31 (and then at last continuing it until March a few days later), will have caused huge unnecessary unemployment.
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However, while the furlough scheme should be good news for many of those employees who do still have jobs and are in sectors affected by the pandemic and associated restrictions, businesses which have to close or cannot operate at anywhere near normal levels will need further support.
This should come in many cases in the form of grants, to cover the other costs businesses must bear while we await the roll-out of vaccines and the return to normality which certainly now looks within grasp. Grant support will be particularly crucial to the likes of smaller businesses, and generally to those without deep pockets which would be doing fine had it not been for the pandemic.
And, given it is the UK Government which has the real tax-raising powers, that is where the money must come from. Of course, given how close we are to a way out of this misery, the banks must also be supportive of businesses which are coming under huge pressure amid the reintroduction and tightening of restrictions.
The huge impact of these restrictions is plain to see.
In Scotland, we have some of the country’s best-known hotels, including Gleneagles, shutting their doors temporarily even though they are not in tier-four areas. Many players in the sector are doing likewise, with some struggling for survival.
And there is no doubting the huge challenges facing the retail sector, north and south of the Border, with the closure of non-essential shops throughout England from November 5 and now in large parts of Scotland at a time when the key festive trading period should be getting under way.
Figures this week showed the year-on-year rate of decline in Scottish retail sales value accelerated again in October, amid a tightening of coronavirus-related restrictions and major economic uncertainty.
Brexit was cited as another factor weighing on consumers. More of that later.
The value of sales north of the Border in October was down 8.5% on the same month of last year, the Scottish Retail Consortium figures show.
Responding to the Scottish Government decision to move 11 local authority areas into tier-four restrictions, the SRC said: “This will see so-called non-essential shops in these council areas shuttered for three weeks, during what is traditionally the key trading period of the year for many.
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“The SRC estimates this will affect over 45% of non-essential shops in Scotland, and those shops will lose out on over £90 million per week in lost revenue whilst they are closed.”
SRC director David Lonsdale said: “Many Scottish shops face a bitter winter following this deeply disappointing announcement on store closures.”
There is no doubt businesses and their workforces in retail and many other sectors face a grim winter.
However, amid this misery and with worse to come, we should retain hope, banks have to keep faith in businesses to which they lend, and government must provide adequate support.
While misery has intensified on so many fronts with the emergence of the second wave of Covid-19, the news on vaccines this week and last has been very good indeed.
US group Pfizer and BioNTech of Germany last week revealed the Covid-19 coronavirus vaccine they have developed had so far proved more than 90% effective in phase three trials.
High hopes that effective vaccines can help countries around the world emerge from the human tragedy that is the coronavirus pandemic were reflected in a surge in global stock markets after this news.
A further fillip came this week when US company Moderna said the vaccine it had developed was nearly 95% effective. And Pfizer and BioNTech now put their vaccine’s efficacy rate at 95%.
With a number of other vaccines in late-stage trials, such as that being pursued by the University of Oxford and AstraZeneca, hopefully there will be further good news.
It is crucial not to lose sight of the game-changing success with vaccines announced so far, especially given darker days will lie ahead before we get to that light at the end of the tunnel.
You would surely imagine the UK Government might want to do all it can to help.
However, sadly its track record and reluctance to do the right thing, for people and businesses and for the long-term health of the economy, would suggest we should not take this for granted.
And that brings us back to Brexit.
While the grim struggle for households and businesses this winter has become ever clearer, the Johnson Government remains as determined as ever to heap misery upon misery by ensuring the UK will leave the European single market on December 31. This ideological pursuit will be very expensive indeed.
Accountancy firm KPMG this week estimated Brexit could cut UK growth next year by 2.9 percentage points to 7.2%.
This is the last thing the UK needs. After a precipitous plunge in output this year, we need all the growth we can get in 2021 for the sake of living standards. Sadly, living standards tend to get ignored by Brexiters on their ideological crusade, which will of course affect the economy not only in 2021 but over subsequent years and decades.
KPMG says the economic impact of the current lockdown will be “relatively mild”. It predicts that, overall, GDP will fall by 2% in the final quarter of this year.
Of course, the lockdown is needed to save lives. Brexit has no sensible purpose.
Setting out the impact of what is to come on Brexit, KPMG says: “The manufacturing sectors hardest hit by Brexit, including textiles, chemicals and electrical manufacturing, could see output at the end of 2021 between 6% and 12% lower than in Q4 2019. This is down to bottlenecks in supply chains, border frictions and falling investment, as well as the ongoing fallout of the Covid-19 pandemic.
“Uncertainty and loss of access to the EU market for the UK’s financial services sector could lead to 10% lower output over the same period, while the UK economy as a whole is not expected to reach pre-Covid levels until the end of 2022.”
Its forecasts assume agreement on a narrow trade deal with the EU which excludes services, of the type the UK Government is trying to negotiate. They also assume that a vaccine is ready to be rolled out early next year, bringing about the end of social distancing restrictions by late spring.
Of course, an even-worse no-deal scenario remains possible.
And the impact of Brexit even with a narrow trade deal will be such a painful and needless blow for millions of households and so many businesses, hampering the potential for recovery from the pandemic enabled by vaccines after what will be the toughest of winters.
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