Gilson Gray LLP are once again delighted to be sponsoring the North-East Quarterly Economic Survey, issued today by Aberdeen & Grampian Chamber of Commerce.
This report is a key barometer into the financial health of businesses in the north east as it reflects not only the feedback of local businesses, but provides a comparator to the UK-wide feedback on the same issues, giving us a good sense on how local businesses are faring in the economy. As a national firm who is continuing to invest in our growth in the region we are proud to support this work by the Chamber along with the British Chambers of Commerce.
We are pleased to see the response rate for the North East of Scotland remains high with 167 respondents, representing 3% of the national response – more than 4 times higher than our pro-rata population. Businesses in this region are engaged on the issues we are discussing here. It is also encouraging to see responses from across the range of sectors, ensuring that this is a strong representative sample of what our companies are saying locally.
The results continue to show encouraging signs for the local economy as we appear to slowly edge back from the brink of a threatened recession. Local businesses continue to see sales growth with 86% reporting stable or increasing sales domestically and 91% internationally. The north east continues to show why it is critical that our governments must support this region to be a vital part of our national export economy.
At the same time, we saw a slight increase in the number of local businesses reporting higher debtor days from 28% last quarter to 32% this time round. This represents an ongoing payment challenge in certain sectors and it remains key for local businesses to maintain strong cashflow rigour. We have seen this play out locally with a number of businesses asking us to support them on non-payment challenges and others asking us to advise on options to strengthen contract terms.
And costs also remain high in our region putting upward pressure on prices and that will continue to challenge profitability. Labour costs remain a key factor for local businesses, with 79% of firms seeing price pressure. Despite the fact that 88% of businesses believe their turnover will remain stable or increase this year, we do continue to see some redundancies in certain sectors as businesses struggle to get their costs under control.
Across almost all factors the north east economy continues to perform better than the national average as companies slowly grow in confidence. However, it is clear that 2024 will be a year where profitability continues to be challenged and costs and cash control will remain critical factors for all businesses through the year.