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Gloomy Chambers survey follows upbeat reports

Stephen Leckie
Stephen Leckie: immense strain

A new report showing Scottish businesses and the economy faltering under increasing cost pressures and declining confidence contrasts with a more upbeat mood emerging in recent weeks.

The gloomy survey by the Scottish Chambers of Commerce and Fraser of Allander Institute says cashflow and profits are falling, investment decisions have paused, firms are raising prices and struggling to recruit and retain staff.

However, the survey was conducted in November and December ahead of more recent data which has shown the economy grew in November against expectations of a fall, while retailers enjoyed a better than expected Christmas.

Figures this week have also shown that inflation has fallen for a second month, raising hopes that central banks will relax their aggressive interest rate policies.

Office for National Statistics data shows labour market pressures are easing with the number of vacancies beginning to fall and record numbers in work.

Wholesale energy prices are now coming down, though there remain concerns over the severe curtailing of energy support packages in April which will expose companies to steep increases in their bills.

Commenting on the Chambers’ survey, president Stephen Leckie states that “all sectors are coming under immense strain” though this contrasts with a survey in December by Scottish Engineering which said there was a “surprisingly upbeat picture” among the country’s industrial companies with a seventh consecutive quarter of positive order intake and output volume.

According to a survey by Lloyds Bank at the end of December, almost two-thirds of Scottish respondents (63%) said they were confident they would have greater success in the coming 12 months, compared to the past year.

Mairi Spowage, director at the Fraser of Allander Institute, said the consensus was that UK and Scottish economies are now in recession. However, that view has been challenged by the recent data which suggests the recession may have been delayed.

A separate survey of more than 2,300 UK SME exporters has revealed an even split between SME exporters who are continuing to report falling export sales (27%) compared to those reporting an increase (26%).  

Similarly, just over a third of SME exporters (36%) expect to see increased profitability in the next 12 months, while an almost equal number (35%) expect a decrease.  

The BCC’s quarterly Trade Confidence Outlook for Q4 2022 showed the squeeze on SMEs exporters operating margins remains, with 64% expecting to raise their prices.       

Three main cost pressures continue to dominate as utilities, labour costs and raw materials are again the biggest concerns cited by exporters.

Comment: Cheer up, resilience will save us from the gloom

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