Threat to recovery

Ministers told ‘stop adding to business costs’

Tim Allan

Tim Allan: ‘progress is under threat’

Businesses in Scotland have continued to benefit from the easing of Covid-19 restrictions but need government to “stop adding to costs”, says the Scottish Chambers of Commerce.

Tim Allan, Chambers president, said rising energy prices, inflation, labour shortages and higher taxation could all undermine the recovery.

In a statement with the Chambers’ latest quarterly survey, he said the Scottish economy and businesses were “shaking off the cobwebs to deliver a strong start to economic recovery over the summer months, in line with the easing of COVID-19 restrictions.

“However, that progress is under significant threat with increasing concern over the emerging energy crisis driving up business costs, inflation and taxation, the cost of raw materials and shipping, all of which are fuelling uncertainty at a time when businesses urgently need confidence and certainty to continue their recovery from the pandemic.

“An additional growing challenge for business is instability in the labour market and persistent skills shortages.

“All sectors in the survey are reporting increased recruitment difficulties, in line with official statistics recently reporting record high vacancies for the Scottish and UK economy.

“If Scottish businesses cannot get the talent that they need, they risk falling dangerously behind the curve on recovery and growth.”

Calling for the UK and Scottish governments to take a lead, he said: “There is no time for timidity when it comes to action to support businesses and that’s why the Scottish and UK Government must urgently back business with a clear economic plan and budgets focused on business recovery.

“It is business which is driving the rapid return to economic growth and Governments must stop adding upfront business costs and instead focus on supercharging recovery by creating the right environment for businesses to trade, invest and grow.”

Mairi Spowage, director of the Fraser of Allander Institute which compiled the latest research, said: “There are still a number of risks to the fragile economic recovery.

“It is unknown how many of the workers who were on furlough at the end of September will become unemployed or unable to secure the type and level of work they want.

“As well as the risk of joblessness, labour shortages are becoming clear in many sectors, threatening goods shortages and adding to wider inflationary risks.”

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