If there’s a prolonged second lockdown academics at the University of Edinburgh Business School fear that 43% of Scottish jobs in tourism and hospitality could be lost as firms go bust. This would mean the loss of 89,870 jobs.
It also estimates that if there is not a second lockdown, but the economic downturn is as bad as 2008 – then a quarter of businesses in the sector could close with the loss of 58,000 jobs – out of the 209,000 employed.
The research carrried out by academics at the University of Edinburgh Business School in collaboration with Wiserfunding, wrote the new report to help governments and business managers decide where to focus support,
and it compiled it after looking at the financial statements of 5,000 Scottish companies in the sector, and looked at their profitability and level of debt.
It came to the conclusion that businesses that showed the highest level of adaptability should be rewarded and offered additional, tailored support to overcome the crisis.
Dr Galina Andreeva, senior lecturer in management science at the Business School, said:“We hope that the results of our study will be useful to governments and business managers to decide where to focus support during the next phase.
“Our results confirm that the current government efforts to support the sector are going in the right direction.
“However, we would recommend support tailored to company size to maximise impact. Firms that show the highest level of adaptability should be rewarded and offered additional support to overcome the crisis.
“The withdrawal of current borrowing schemes should be carefully planned in order not to create additional shocks to companies with high debt levels.”
Dr Gabriele Sabato, co-founder and CEO of Wiserfunding, commented, “The picture that comes out of our models is providing a frightening, but also encouraging message for SMEs.
“Although, they have been severely affected by this terrible pandemic, they are also the ones that can adapt faster and lead the recovery.
“The financial industry should carefully consider the results of this study when
setting their lending criteria in the post CBILS (Coronavirus Business Interruption Loan Scheme) world in order to target the allocation of their funds at boosting the UK recovery.”
The study was funded by the university’s Data-Driven Innovation initiative, part of the Edinburgh and South East Scotland City Region Deal.