Scotland's flatlining business investment a 'wake-up call' to government - Scottish Chambers of Commerce

Due to pressures in the housing market, construction firms reported the largest contraction in housebuilding contracts since the second quarter of 2020, during the first Covid lockdown. The economic indicator is regarded as Scotland’s longest-running business survey, operating since 1990, and 95 per cent of respondents to the survey were smaller companies with less than 250 employees.

Stephen Leckie, president of the Scottish Chambers of Commerce, said: “The survey results highlight that persistent economic uncertainty is forcing firms to put investment decisions on hold, which makes prospects for medium and long-term growth far more challenging. The flatlining performance across the business community must act as a wake-up call to governments north and south of the Border. Governments must work with us if we are to revive investment decisions and maintain our competitiveness as a business destination.

“The eyes of the business community are firmly on how the First Minister will respond to the new deal for business recommendations. Specifically, how he will reform non-domestic rates to incentivise businesses to grow as well as find the right balance between taxation and spend. Pressures from a tight labour market are making it difficult for firms to fulfil orders and inflation is placing great pressure on businesses to meet growing demands for higher wages,” he added.

Mairi Spowage, director of the Fraser of Allander Institute, said: “Despite the latest data showing little movement, we still expect that inflation will come down as we move through 2023 as we compare to the higher price levels in 2022. This chimes with the expectations in the survey today, albeit there are significant sectoral variations.”

Scottish firms planning to invest and hire despite fall in confidence