Scots business confidence 'firmly' in negative territory, although separate study flags 'resilience' despite challenges
Business confidence in Scotland is now “firmly” in negative territory, according to a survey of chartered accountants published today, prompting a call for Westminster to act in this week’s Budget to revive sentiment.
However, a separate study from Scottish accountancy group Henderson Loggie has found that a “resilient” attitude dominates in Scottish businesses, despite difficult economic conditions and recent political turmoil.
The Institute of Chartered Accountants in England and Wales’ (ICAEW) business confidence monitor has shown that in Scotland, for the fourth quarter of 2022, confidence tracked at at -16, having fallen over the past five quarters, although it was more positive than the UK-wide level of -16.9.
Half of Scottish businesses polled cited the availability of non-management skills as a growing problem, the highest level on record for the survey and the most prominent issue for companies, while staff turnover was flagged as an issue by 46 per cent. Three in ten businesses said late payments were a growing challenge, the joint-highest rate in the UK along with Yorkshire and the Humber, and suggesting that Scottish companies are experiencing more difficult financial conditions, the report said.
Sales growth had begun to decline but remained healthy, with growth of 5.3 per cent in the year to date, but Scottish companies also reported the biggest rise in input costs since late 2004, with no reprieve forecast over the next year.
David Bond, ICAEW director for Scotland, said it was “unsurprising” that confidence among businesses in Scotland was “firmly in negative territory” given the circumstances. He continued: “[This] Thursday, the Westminster government must outline a plan to restore confidence, generate environmentally sustainable long-term economic growth, and bring opportunity and prosperity to our left-behind communities and regions.”
It comes after gloomy new UK economic data and a recent report saying Scotland looked set to face an “extremely difficult period”.
Painting a more positive picture was the Henderson Loggie Scottish business survey carried out in association with the Research Chamber, the research team at Aberdeen & Grampian Chamber of Commerce, which said reducing business rates was seen as the top action for governments on both sides of the Border to support business growth.
That study found that three in five respondents said they planned to grow their businesses in the year ahead, and nearly four in ten said they aimed to strengthen existing levels of activity. Furthermore, just over half are prioritising employee wellbeing and staff-development.
Jaslin Bhagrath, partner and head of accounting and business solutions at Henderson Loggie, said: “It is a tough environment, but overall, our business barometer points to a sense of fortitude in the business mood as managers continue to deal with the fallout of Brexit, the pandemic, and the ongoing impact of the war in Ukraine. Yet, while grappling with issues around cost control, concerns for employee wellbeing are front of mind right now as they prioritise attracting, training and retaining the people needed for their businesses to prosper in the short term.
“It may raise questions around long-term strategy as this focus on staffing issues ranks ahead of improvements in sales and marketing which is of importance to only 31 per cent of respondents, and investment in innovation and [research and development] which is a priority for just 10 per cent of businesses in Scotland today.”