One in four businesses in Scotland are planning on getting rid of office space as long-term home working becomes the new normal.

The business community in Scotland continues to be unsettled with more than a quarter of firms saying they are planning on cutting down on office space, according to a new survey. The research has found that 28% Scottish companies will be getting rid of office space due to the increase in home working as a result of the Covid-19 pandemic. 

According to the findings of the quarterly Scottish Business Monitor, more organisations are switching to a remote model with a view to keeping this going post-pandemic. However, only a tenth of businesses say that working from home has helped employee productivity. 

Around 50% of respondents say that productivity has gotten worse since people started to work from home. More than half agree that remote working has made collaboration more difficult and has made it harder to innovate and manage staff. 

As well as closing offices, the survey also found that many businesses are expecting to reduce staffing levels in the next few months. Some 20% of all sectors are predicting that staff will be let go, which increases to 70% for organisations in the tourism and hospitality industry. 

However, it is worth noting that the survey was carried out in mid-October before it was announced that the furlough scheme was to be extended. With the scheme now running until March, it could see many of the jobs that were at risk saved.

Unfortunately, 40% of all firms say they feel insecure or very insecure about their cash flow, especially with restrictions on business activity continuing through the winter months. This could mean that fewer companies are able to rebound from the effects of Covid-19 felt earlier in the year, resulting in further insecurity – especially as 40% also expect business volumes to decline over the next few months. 

Even with the furlough scheme extension, over 25% of companies have said they are expecting to operate at less than half their capacity over the next six months. However, recent reports that the UK has rebounded from recession could see more positive results from the next quarterly survey. 

Graeme Roy, Director of the Fraser of Allander Institute, said: “Unsurprisingly, the majority of businesses in Scotland remain apprehensive about the outlook as we continue to navigate our way through a turbulent economic period.”

“In the survey, we also begin to look ahead to the ‘new normal’,” he continued. “We find that for many businesses, the increase in home working is here to stay. 28% of businesses surveyed plan to reduce their office space in the future in response to home working. But interestingly, we find that only one in 10 firms believe that home working has helped tier productivity with a majority reporting challenges in managing staff and collaborative working.”