Call for business support amid recession fears

Scotland's business leaders have called for more support in the face of the bleak economic outlook.

The Bank of England has increased interest rates to 1.75% and warned inflation is now set to hit more than 13%.

Retail and licence trade associations said more UK and Scottish government support is needed ahead of an expected recession.

The Scottish government has said its focus is on supporting the lowest paid.

Latest data from the Scottish Retail Consortium (SRC) showed footfall in July was 16.5% down on pre-pandemic levels and 0.7% worse than in June.

The decline was larger than the UK average of 14.2%.

The summer heatwave, rail strikes and the ongoing cost-of-living crisis were all blamed.

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Ewan MacDonald-Russell, head of policy at the SRC, told BBC Radio's Good Morning Scotland: "As the year progresses, there is little evidence Scottish consumers are close to returning to pre-pandemic shopping patterns.

"The reality is big ticket items are down and we know people are trading down from premium goods to value goods and cutting back on spending now.

"We need action to tackle the high business rates burden and measures to help consumers, particularly less affluent consumers."

Mr MacDonald-Russell added that "big and punchy" moves to help consumers were needed, adding there was no room for "half measures"in the UK government's autumn budget.

Meanwhile, a survey of 100 businesses by the Night Time Industries Association Scotland has found 38% respondents were "unsure" whether they will survive the next 12 months due to soaring costs.

The vast majority are trading below 2019 levels of business.

Colin Wilkinson, managing director of the Scottish Licensed Trade Association (SLTA), said this pressure was being felt across the hospitality sector and described the Bank of England's interest rate hike as "very unwelcome".

He said: "The sector continues to see a slow recovery from the pandemic and then the cost of living crisis.

"This interest rate increase could simply be too much for our smaller operators.

"The industry benefited greatly from the VAT cut in the pandemic and Eat Out To Help Out was successful. We don't have that now so we'd like to see a cut in VAT for the licensee hospitality sector and a complete review of the business rates."

Scottish government business minister Ivan McKee said he was "continuing to call on the UK government to support the lowest paid in our communities".

He added: "The Scottish government has put in about £3bn worth of support for low paid families and we would call on the UK government to do something similar.

"VAT is a reserved matter for the UK government and we've asked they consider options there to be able to support businesses at this difficult time."

Mr McKee said the Scottish government had put "significant support" into the business rates system to help businesses through the pandemic.

On the calls for more support for the hospitality sector, a Treasury spokesman said the UK government had "stood behind the hospitality sector throughout the pandemic with a £400bn package of economy-wide support that saved millions of jobs and offered a lifeline to thousands of night-time businesses up and down the country."

He added: "At the Spring Statement we went further, announcing a £1,000 increase to the Employment Allowance which will cut taxes for thousands of bars, clubs and venues in Scotland."