Less doom and gloom for Scottish businesses despite economic 'bumps'

Despite an unpredictable economic and political situation, resilient Scottish businesses have indicated they are continuing to attract investment.

The latest quarterly ‘Deals’ supplement, published in today’s Scotsman, says while companies are still facing uncertainty, ongoing cost pressures and the imminent end of the UK Government’s energy support package, there is less doom and gloom than just a few months ago.

Neil Burgess, a partner who leads the corporate and commercial practice at law firm Brodies, said: “Recent figures show that inflation fell in December 2022 for the second consecutive month. Although while inflation might be viewed as having peaked, it is still high. There are also suggestions that the recession might be protracted, but relatively shallow, which isn’t quite as bad as might previously have been anticipated.“

Burgess has said while it is a mixed picture, there are some reasons for optimism and the resilience of many Scottish businesses should not be underestimated.

Views across Edinburgh, where Scottish businesses are optimistic despite the economic doom and gloom. Picture: Jeremy Stockton

Lyn Calder, managing partner in Edinburgh and head of deals for Central Scotland at business services group AAB, agreed this is a time of uncertainty, with varied views emerging on the outlook for the economy.

“The picture was one of doom and gloom for a while, but there are now signs that inflation is easing and things look a little bit brighter,” she says. “As in recent years, it’s hard to predict what the rest of 2023 will look like. Some reports suggest the recession won’t be as deep as we had thought, and others say we’re still in for a rough time.”

Calder has suggested that while inflation may be coming down slightly, it is not going to fall to a level this year that people have become used to, or that pleases the Bank of England.

She explained it is likely higher interest rates will be the ‘new norm’. She said interest rates lower than 2 per cent feel unrealistic in the short or even medium term.

“This is all having a knock-on effect on people’s attitudes,” she says. “I think everyone is realistic enough to think we’re going to see more bumps in the road this year.”