Omicron crushes fragile optimism in north and Moray, latest FSB survey finds
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OPTIMISM among Highlands and Islands businesses increased throughout 2021 – but has now taken a big hit thanks to Omicron – says the Federation of Small Businesses (FSB).
The last in a series of five business surveys conducted by the FSB this year looked at all types of business in Moray, the Highlands, Islands, Argyll and Arran.
The survey found the impact of Omicron was growing rapidly and causing considerable pain and concern to numerous customer-facing businesses and their suppliers.
It also highlights staff shortages and utility and other cost increases as two of the greatest threats to business viability.
These threats are squeezing margins and forcing prices up.
FSB Highlands and Islands development manager David Richardson said: "Our latest survey closed on December 14 and, perhaps understandably, it found that businesses are the most positive they've been all year about how trading has gone in 2021, with around three-quarters (76 per cent) saying that they have done OK or better. Conversely, eight per cent were really struggling/barely staying afloat.
"The Omicron variant started to flex its muscles during the survey period, and the rapidly deteriorating situation as the virus spreads, together with reimposed Covid measures and calls for the public to exercise extreme caution, are taking their toll on trading.
"No wonder just over half (53 per cent) of Highlands and Islands businesses said the potential for future lockdowns or tightening of restrictions was a major fear, and almost a third (31 per cent) were pessimistic about their futures. One wonders what impact the news since the survey closed would have had on these percentages."
The survey found that 24 per cent of employers in the East and Central Highlands, including Moray, didn't have enough staff to meet their needs.
And while just over a third (36 per cent) of short-staffed Highland businesses had struggled on as best they could, the rest had to cut services, opening hours or both.
Increasing costs have also taken their toll on 85 per cent of Highlands and Islands businesses, with four in 10 (40 per cent) saying that their profit margins have shrunk but they are struggling on, a quarter (27 per cent) that they are reducing their ability to invest in or expand their businesses, and almost two in five (18 per cent) that rising costs are impacting on their businesses’ survival chances.
As a result, almost a half (47 per cent) of Highlands and Islands businesses have increased prices this year, and a quarter (24 per cent) plan to do so in 2022.
Mr Richardson added: "Aside from Covid, the two most potent problems facing businesses from the Mull of Kintyre and Arran in the south to Moray in the east and Unst in the north are arguably the shortage of staff and rising costs, and the two are clearly linked.
"Whether the demand among locals and visitors/potential visitors remains strong in the face of price increases remains to be seen, but, worryingly, some businesses say that they are reacting to the many trials and tribulations that they face by reducing hours and services (57 per cent) or downsizing (16 per cent). More positively, 14 per cent are automating so that they can reduce their dependency on staff."
