ICAEW has revealed how its latest Business Confidence Monitor for Scotland found optimism at 12.4 on the quarterly index – in positive territory but considerably down from the peak seen at the end of 2021.
The accountancy body said the drop was likely related to the growing challenges businesses face, particularly on the supply side and with recruitment, and compares to the UK-wide figure of 18.6 , down from a peak of 47 three quarters ago but having stepped downwards for a third three-month period in a row.
Looking at Scotland, ICAEW said businesses have shifted additional costs to customers, with selling prices consequently experiencing their largest increase for nearly 14 years, while the proportion reporting the availability of non-management skills and staff turnover as growing problems was found to be “significantly” above the nation’s historical average.
Furthermore, ongoing concerns over recruitment and skills mean businesses plan to increase their salaries by 3 per cent, which would be the joint-highest rise since mid-2008, according to the study, which polled 54 chartered accountants in Scotland between January 17 and April 21.
Companies north of the Border recorded a 7.1 per cent increase in domestic sales, the highest rise since the survey began in 2004, while the forecast for the next 12 months is also robust. However, one in three cited government support as a growing problem, the highest rate yet.
David Bond, ICAEW director for Scotland, said: “Though confidence remains in positive territory, Scottish businesses would appear the least confident in the UK. But while our businesses will be buoyed by record domestic sales growth, they’re aware this growth could easily be derailed by challenges ahead like supply-side problems, skills and recruitment, as well as the economic threats posed by the cost-of-living crisis and soaring inflation.”
He called on Chancellor Rishi Sunak to address the high cost of living with “targeted, strategic financial measures to prevent disastrous consequences for people’s standard of living and the amount of spending in the economy, which could result in real pressure on businesses”.