Drumbeat of Budget warnings are a headache for Scottish businesses

Dr Liz Cameron CBE is Chief Executive of Scottish Chambers of CommerceDr Liz Cameron CBE is Chief Executive of Scottish Chambers of Commerce
Dr Liz Cameron CBE is Chief Executive of Scottish Chambers of Commerce
The mood music for Labour’s Autumn Budget is striking a wrong chord with Scottish businesses.

A constant drum beat of warnings over tax rises and tough financial decisions has simply added to the headaches many of our 12,500 members are facing.

The latest quarterly Scottish Chambers of Commerce survey has recorded a record number of firms highlighting fears over taxation as their biggest concern.

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Of the hundreds of businesses surveyed, more than half are worried about taxation changes, with tourism and retail sectors reaching five-year survey highs of 77% and 70% respectively.

Scotland's hospitality sector can't cope with further tax increases, says Dr Liz Cameron (Picture: Adobe)Scotland's hospitality sector can't cope with further tax increases, says Dr Liz Cameron (Picture: Adobe)
Scotland's hospitality sector can't cope with further tax increases, says Dr Liz Cameron (Picture: Adobe)

We have now passed the first 100 days of government and are still waiting on supportive measures and action to help ease cost pressures, restore confidence and incentivise investment.

Whilst we recognise the fiscal pressures on public finances facing Chancellor Rachel Reeves, the solution does not lie in increasing the expense of doing business.

As the survey has showed, four out of five business sectors reported a fall in profits, with profit margins suffering and three out of five sectors recording a contraction in cashflow. Services and tourism were the only exceptions although the latter was mainly buoyed by the peak trading season.

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The forthcoming UK Budget needs to support business and address the issues we have consistently flagged. And it would do well to match the pre-election rhetoric which promised a government prepared to listen to, and work with, business.

Worryingly, the theme tune to date has jarred, with a negative impact on investment and confidence at a time when we desperately need to ease the cost pressures on businesses and invest in economic growth.

Rising energy costs remain a major concern for more than half of the hundreds of firms surveyed and it remains difficult to make investment decisions when there is a lack of clarity over the direction of energy taxation. To make matters worse, next quarter will see many longer-term energy deals ending and businesses facing hefty increases, with gas bills set to rise 50%.

Without understanding future energy costs and a detailed strategy as part of the just and fair transition to Net Zero, businesses remain reluctant to invest.

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That hesitancy will be potentially compounded by the nature and size of the Chancellor’s tax burdens and changes and how it will impact the business community.

Whilst we await the UK Budget announcement, we will also be looking further ahead to December’s Scottish budget and positive action to address business rates which remains a huge pressure on almost two thirds of retail firms surveyed. The hospitality, tourism and leisure sectors, in particular, cannot cope with any further tax increases.

Half of businesses also reported major recruitment issues, particularly skills shortages, and while we broadly welcome the new UK Employment Rights Bill there are potential increases in costs and unintended consequences.

With businesses already implementing many of the principles, the Bill needs to ensure there is no increase in costs and changes are proportionate and sensible at a time when many are already struggling with higher wage bills and escalating costs.

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SCC has long urged the Chancellor to help ease the labour market and skills shortages challenge by unlocking targeted investment in training, with skills aligned to business demand as well as a clearer international workforce strategy to help fill key skills gaps.

Quite simply, without delivering the workforce of the future our economy will stagnate as our worldwide competitors gain an advantage.

Whilst the mood music so far has struck the wrong chord, the Chancellor has the opportunity to publish a Budget that is music to our ears by listening to business and implementing our growth solutions to create jobs and stimulate growth.

On the passing of Alex Salmond:

Alex Salmond was one of the most impressive politicians I have met and his sad and untimely death has left a huge void in Scotland.

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He knew the importance of working with business to build a more prosperous nation and he had the foresight and understanding to balance his social conscience with a pragmatic grasp of economic reality.

Our thoughts go out to his family at this difficult time.

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