The latest Business Barometer, which surveyed 1,200 businesses, from the Bank of Scotland, showed that companies in Scotland felt less confident than other nations. When asked about the impact of COVID-19, more than one third of businesses said they expected to be operating at more than 50 percent capacity by the end of June.
However, one fifth said they do not expect to be open at all by then, while 21 percent said they thought it would take around three months to be operating at pre-lockdown levels.
The majority of businesses have also seen a fall in demand during June with just five percent reporting an increase in demand.
Across the UK, business confidence grew marginally month-on-month, rising three points to -30 percent.
The West Midlands was the least pessimistic region at -18 percent, followed jointly by Yorkshire & the Humber and the North East at -23 percent.
Scottish business confidence is at -41 percent.
There are fears that the Scottish economy could be severely impacted.
It comes after the Scottish Government said that it needed to borrow up to £500 million more to deal with the impact of coronavirus, as well as having greater flexibility over its capital budget.
A formal request was sent to the Treasury on Friday.
At the same time, Boris Johnson set out his plan to get the UK back on track post coronavirus which included investing more than £5bn in Infrastructure.
The Advisory Group on Economic Recovery said in its Scottish Economic Recovery Report that urgent action was needed to develop a stronger relationship between business and government on how they can recover from COVID-19.
Business confidence in Scotland is the lowest in the UK.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While the results suggest the economy may be starting to see some improvement, trading conditions remain difficult for most firms as the majority are still experiencing disruption to supply chains.
“Hopefully the recent Government announcement of further relaxation of restrictions and the slight easing of social distancing measures will enable more businesses to reach their capacity and resume their usual activities, which we would expect to be reflected in further improvements to optimism next month.”
Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, said that the plans to rebuild the economy must be backed with “intent, collaboration and investment of a scale not seen since the last century”.
She added: “The Prime Minister set out a compelling case for investing in infrastructure and we urge both the Scottish & UK Government to work together to put shovel-ready projects on the table and deliver investment to ensure the economy is supported in the immediate, medium and long term.
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Thousands of people are also out of work.
“Boosting consumer confidence by announcing VAT cuts, providing further job security by extending the furlough scheme for the hardest-hit sectors and providing guaranteed opportunities for our young people are just some of the immediate steps both Governments should collaborate on and deliver for business.
“The Scottish Government must ensure all consequential funding is allocated towards rehabilitating the economy and creating jobs.”
The Scottish Government said it would respond to Mr Higgins’ report by July 31st.