Martin Bell

BDO’s second Re-thinking the Economy survey reveals that medium-sized businesses in both England and Scotland have each taken an average of £21 million in loans as a direct result of COVID-19, although almost a third (28%) of businesses in Scotland reported taking on no additional debt.

The research shed light on the scale of redundancies across the mid-market. 80% of Scottish companies have made permanent job cuts, compared to 91% across the UK.

The findings also point to some early signs of recovery and resilience within the mid-market. More than half (54%) of mid-sized businesses in Scotland were either unaffected or increased revenue in recent months, compared with 33% across the UK overall.

There was also clear support for the government’s furlough bonus scheme, with over half (52%) of Scottish businesses saying they were now planning on either bringing back all staff or a larger group of staff than originally intended as a result of the bonus.

While it may be a long road ahead, a recovery is expected. Over half (65%) of respondents predict it would take the economy between one to three years to recover from the impact of COVID-19.

Martin Bell, head of tax at BDO in Scotland, said: “History tells us that the level of resilience of the mid-market will be key to economic recovery. This data shows us that, while challenges remain, businesses have acted decisively to protect themselves and weather the storm.

“Some businesses have taken on large amounts of debt to survive the crisis, which prefaces a long road to recovery. But at the same time, some companies will use this as a moment to rethink their operations and business models.

“Thankfully, the entrepreneurial spirit of Scotland’s ambitious, mid-sized businesses has not been completely dampened, with many launching new products or services during lockdown and others aim to create the next generation of workers using the new apprenticeship funding.”

• Read all of our articles relating to COVID-19 here.