The Scottish Chambers of Commerce (SCC) has said its latest quarterly findings show that the rising prices of energy, food and raw materials, coupled with labour market insecurity, have surrounded the economy with weaker growth prospects. The report found that, since April 2022, nine in ten Scottish firms surveyed were continuing to report major inflationary pressures.
The UK and Scottish governments have been urged to take urgent action to stop businesses in Scotland falling deeper into crisis, Stephen Leckie, president of the SCC, said.
The survey, which encompassed 360 firms in Scotland, found that seven in ten flagged rising energy bills as the largest contributor to their cost pressures.
Fuel and labour costs, alongside raw material prices, are also of significant concern, the report found. In an effort to combat the issue, more than three quarters of firms have indicated that they plan to increase prices in the next quarter. Furthermore, the number reporting recruitment difficulties was up by 10 per cent from the previous three months.
Mr Leckie, whose other roles include leading Crieff Hydro Family of Hotels, has warned that the survey showed that cost and inflationary pressures were "deterring investment", and forcing businesses to make "difficult decisions for business survivability".
He said: "Urgent action is needed now from the Scottish and UK governments if we are to reverse the tide of economic decline, restore confidence, and put the economy back on the road to growth.”
Mr Leckie also called on Chancellor Rishi Sunak to work with businesses ahead of the Autumn Budget to help them "weather this perfect storm" – and he believes support must not end there.
"The Chancellor must present a long-term economic plan developed in partnership between business and government focused on restoring business and consumer confidence, investment, and growth to Scottish and UK economy," he added.
The SCC president also urged the Scottish Government to extend the 50 per cent business rates reliefs available to retail, hospitality and leisure sectors.
A UK Government spokesperson said: "While no government can control the global factors pushing up the cost of various essentials, we will continue to support British business.
"The super-deduction is the biggest two-year business tax cut in modern British history, allowing companies to cut their tax bill 25p for every £1 they invest. We've also cut taxes for hundreds of thousands of businesses by increasing the Employment Allowance, and we slashed fuel duty, saving van drivers £200 and hauliers £1,500.
"The Chancellor has made clear he will reform and cut taxes on investment in the autumn to spur growth and productivity – and we're currently working with industry on how best to do this."
A spokesman for the Scottish Government said: "The Scottish Government is doing everything possible with the powers we have to ensure people, communities and businesses are given as much support as possible to deal with the rising cost of living – but most of the key economic powers needed still lie with the UK Government.
"The situation is being made worse by the impact of Brexit – which Scotland rejected – and its effect on issues like labour market shortages and inflation."