Business monitor

Government ‘must listen’ to help firms thrive

Alan Shanks: ‘there is a need to listen to the business community’

Scottish businesses say that with the right level of government support they can benefit from a pick up in activity following a difficult first quarter, according to a new survey.

The latest Addleshaw Goddard Scottish Business Monitor revealed that in the first three months of the year all its regular measures of activity were in negative territory for the first time since the end of 2022.

Sales, new business, turnover employment, capital investment and exports were all lower, reflecting difficult business conditions as firms continued to grapple with cost pressures despite falling inflation. More than eight in ten (83%) firms said that their costs continued to increase over the quarter, mainly because of wage rises.

However, despite a heightened sense of uncertainty, firms believe conditions will improve amid expectations of new business activity, turnover and employment.

Alan Shanks, head of Scotland at Addleshaw Goddard in Scotland, said: “These latest results show just how important proper stewardship of the Scottish and UK economy is to the Scottish business community.

“The Scottish Business Monitor is a proven, up-to-date barometer of the sentiment among firms and those in a position to affect the levers of the economy would do well to listen to what the business community is saying.”

João Sousa, deputy director of survey partner the Fraser of Allander Institute, said: “This quarter’s results were a bit of a mixed bag, with businesses noting that economic activity had fallen, but expecting it to pick back up in the coming months.

“This is good news for the quarters ahead, and in line with our expectations of moderate growth for 2024 as a whole.

“The main cause for concern, however, is the continued poor outlook for capital investment. Scotland and the UK as a whole already have lower levels of investment than other advanced economies, and unlocking the factors holding back investment is key to sustained economic growth.

“This interacts with the risks around political uncertainty that worry businesses, and it will be crucial for political decision-makers to act in a way that reduces that perceived risk in the months ahead.”

The survey asked Scottish businesses what they required from government and their top priorities were  long-term economic growth (72%), tackling labour and skills shortages (45%), reducing UK business taxes (43%), and investing more on infrastructure (39%).

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