Politicians must mean what they say about growth - Joanne Davidson

Edinburgh Chamber of Commerce director of policy Jo Davidson

All this is happening on the heels of a global pandemic, Brexit and the war in Ukraine, which have driven inflation and rising energy prices.

In other words, the need for our domestic government—whether in Westminster, Holyrood or Edinburgh’s City Chambers—to bring some element of stability is absolute.

They must use every lever available to help our economy grow. We need to generate more money to deliver an improved NHS, better social care, more affordable housing and boost our defence spending. Taxing our way there has never worked effectively; we can only grow the economy by creating a more positive environment for businesses.

Rachel Reeves, poses with the red Budget Box as she leaves 11 Downing Street to present the government's annual budget

So, the past week or so has been disappointing. We have seen UK Government’s increases in both Employer’s National Insurance contributions and Living Wage levels come into effect on April 1, driving up costs for businesses and almost certainly fuelling inflation.

The Scottish Government has stated—despite earlier pledges to the contrary—that it has “no plans” to reform business rates for our hard-pressed hospitality industry, one of our city’s biggest employers.

Currently, the sector is charged by turnover as opposed to by property size – and in the process pays far more than other sectors. The UK Government plans to reform this down south, which, if not matched in Scotland, will place our industry at a competitive disadvantage.

Consider the words of Chamber members Signature Pubs, through their Business Development Director Louise Maclean: “With the recent reduction in the National Insurance threshold, the increase in employers’ contributions, and the rise in the minimum wage, we are confronting an additional annual labour cost of £1.7 million. This situation makes our profit aspirations for 2025 almost impossible to achieve…The ripple effects of these increases will be widespread, and we have no choice but to raise our prices.”

It is not just commercial organisations who have been impacted. Ewan Aitken, Chief Executive of Cyrenians told the Chamber: “For many employers in the charity sector the decision to increase employer National Insurance contributions represents a tipping point within a broken social care system, which is heavily reliant on third sector providers and has been underfunded for a long time…

“The greatest impact of inevitable cuts in charity services will be felt by the vulnerable people who rely on these services but there will be a huge impact too on already overstretched public sector if the community services that keep people out of hospital and out of crisis disappear.”

We have also seen President Trump’s administration in the US introduce 10% tariffs on UK goods sold in the States, hitting our exporting businesses and threatening jobs. The UK Government led by Sir Keir Starmer has pledged to provide a calm and measured response, in the national interest. That is a pragmatic approach, and business will be watching to see how this develops. What is certain is that few economists believe that trade wars and tariffs help any of our economies to grow.

Uncertainty and chaos are the enemies of business and economic growth. Such conditions have an adverse effect – from dampening consumer spending to hindering business investment, from disrupted to supply chains to financial volatility that reduces access to capital and credit.

That is why the Edinburgh Chamber of Commerce will continue to advocate for businesses and organisations. The business-led Call to Action we initiated will see us engage with government at all levels to create an actionable plan to help deliver good growth for our economy. Almost every political leader in our country talks of economic growth being their number one priority. Now we need them to show that they mean what they say.

Joanne Davidson, Director, Edinburgh Chamber of Commerce