RISING COSTS, DECLINING CONFIDENCE AND PROSPECTS OF RECESSION WEIGH DOWN HOPES OF BUSINESS GROWTH
The latest findings from a leading Scottish business survey by the Scottish Chambers of Commerce (SCC) shows Scottish businesses and the economy faltering under increasing cost pressures and declining business confidence. As a result, cashflow and profits are falling, investment decisions have paused, firms are raising prices and struggling to recruit and retain staff.
• PRICE RISES NOW A REALITY: 82% of all firms indicate that they intend to raise prices over the next quarter. This is a successive record high for the survey. The retail and tourism sectors had the highest proportion of firms indicating future price rises at 77% and 76% of firms respectively.
• LABOUR COSTS OVERTAKE ENERGY BILLS AS TOP COST PRESSURE: Concern over energy bills has halved since the previous quarter, attributed to the UK Government’s energy bill relief scheme which took effect from October 2022. Labour costs have now taken precedence as the leading cost pressure, cited by over seven in ten firms (72%). Concern over fuel costs and raw material prices remains high, both being cited by six in ten firms.
• INFLATION REMAINS TOP BUSINESS CONCERN: Concern from inflation has eased for a second successive quarter but remains high with 8 in 10 firms (80%) of firms citing it over Q4. The next highest concerns are interest rates (50%) which has seen nearly a 15% increase since Q3 2022.
• CONFIDENCE DECLINING: On balance, all firms have reported a fall in confidence compared to the previous quarter and a more significant fall compared to last year. On a sectoral basis, every sector reported a fall in confidence with retail and tourism seeing the largest fall when compared to the previous quarter.
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