Monthly economic brief: June 2020

Business Turnover

The coronavirus pandemic and the implementation of physical distancing and lockdown measures has had a rapid and severe impact on business turnover and cashflow across the economy as business have been required to close temporarily or scale down activity while demand has collapsed. Government support packages have been designed to retain as much capacity as possible, however there has been an increased risk of businesses ceasing to trade permanently.

Monthly Business Turnover Index^[6]

• Over the year to April 2020, business turnover in Scotland has decreased for most companies across almost all sectors and decreased to a larger extent than in March (19, down from 30), capturing the full month of lockdown measures.
• The 'Food Retail industry' was the only industry with most businesses reporting an increase in business turnover, however also to a lesser extent than in March.
• The industry with most businesses reporting a decrease in turnover was in the Accommodation & Food services industry, followed by 'Other Retail'.
• Sectors suffering large shocks to turnover are more likely to face cashflow challenges going forward.

Cash Reserves of Business^[3]

• The BICS survey reported that, of the businesses that had not permanently stopped trading between 4 May – 17 May:

• 36% of Scottish businesses had cash reserves to last between zero to six months (UK: 42%).
• 36% of Scottish businesses had cash reserves to last more than 6 months (UK: 30%).
• 2.9% of Scottish businesses reported they had no cash reserves at all (UK: 4%).

Business Dissolution

• Quarterly Companies House data for Scotland reported a slight increase in the number of company dissolutions in Q1 2020.
• Between January and March 2020, there were 6,378 dissolutions in Scotland (UK: 136,978). Compared to Q4 2019, the number of dissolutions increased slightly by 1% (UK: +13%).
• Monthly data, which is only available for the UK as a whole, for March 2020 showed that the number of dissolutions increased by 7,453 (23%) compared to March 2019.