Most businesses worried about political and economic uncertainty, study finds

The vast majority of businesses in Scotland are concerned about the economic and political uncertainty facing the country, a study has found.

More than four in five (85%) firms thought economic uncertainty was a major problem, according to research by the University of Strathclyde’s Fraser of Allander Institute.

The institute’s Scottish Business Monitor reported that 75% of companies also thought political uncertainty was a major concern.

The survey, of more than 350 businesses, found that overall business confidence is expected to hold steady over the next six months.

Bosses reported an increase in hiring and a reduction in the cost of running their businesses.

It comes after inflation reached a three-and-a-half-year low of 1.7% last month, making a fall in interest rates more likely.

However, concerns remain around exports, investment and rising employee costs.

Some businesses are concerned about reports that Chancellor Rachel Reeves may increase employers’ national insurance rates in her Budget at the end of the month.

On Wednesday, Scottish Finance Secretary Shona Robison was urged not to increase business rates again which are already at a 25-year high.

Joao Sousa, deputy director of the Fraser of Allander Institute, said businesses in Scotland are showing a “cautious sense of hope” amid a number of challenges.

She said: “Drops in costs and interest rate cuts are good news, but there’s still a lot of uncertainty about the upcoming budgets from the UK and Scottish governments.

“Many companies are in a ‘wait-and-see’ mindset, looking for clear guidance on what to expect over the next year.

“Scottish firms told us that political uncertainty is still top of mind, and it’s no surprise given some of the more pessimistic messaging from the UK Government on short-term growth prospects and tax rises.

“But there is underlying optimism, and a clearer sense of direction and purpose … the coming Budget might be able to harness that.

“Will business get that? We’ll know better on October 30.”

The Scottish Business Monitor found that one in four businesses expected to see moderate growth in Scotland’s economy over the next 12 months.

Only 4% of firms expected “strong” growth, while many expected the economy to perform below par.

The study also found firms were worried about staff availability, with 78% of those surveyed saying it was a “critical issue” facing them in the next quarter.

A Treasury spokesperson said: “As the Chancellor made clear at the International Investment Summit in London; when we said we would end instability, make growth our national mission and enter a true partnership with business, this Government meant it.”

The Chancellor had said: “After the investments secured as part of this summit, my optimism for Britain burns brighter than ever.

“It’s a sign of the confidence in the British economy.

“And it matters because it will support the growth of businesses big and small across the UK helping them create new jobs and making people better off.”

A spokesperson for the Scottish Government said: “Driving economic growth is a key priority and ministers will work closely with businesses to maximise the huge, economic opportunities ahead.

“Ministers are calling on the Chancellor to use the autumn Budget to provide additional funding to invest in public infrastructure and support vital public services across Scotland.”