Business confidence in Aberdeen and Aberdeenshire has slumped to its lowest
level since the CV19 pandemic, according to a new survey.
After an Autumn Budget that was supposed to unleash growth in the UK
economy, just 27% of firms in the North-east expect turnover to rise in the
coming months – the lowest number since 2020.
The results, drawn from Aberdeen & Grampian Chamber of Commerce’s latest
Quarterly Economic Survey (QES), also show concerns over taxation have rocketed
up the risk register for firms in the region – with 78% of companies in the
North-east citing this as a barrier to growth, up from 48% just six months ago.
The numbers showed a marked divergence on this key indicator between
North-east Scotland and the rest of the country, with a
fifteen-percentage-point variance, as the region deals with another tax raid on
the energy sector on top of the increase in employers' national insurance
contributions.
QES is the UK’s largest and longest-running independent survey on business
sentiment, completed by companies in the Chamber of Commerce network across our
nations and regions, with a total sample size of over 4,800 firms.
The quarterly series is supported and sponsored by Gilson Gray, a
multi-award-winning full-service law firm with offices in Aberdeen, Edinburgh,
London, and across the UK.
As a result of the multiple headwinds for businesses, 60% of North-east
respondents plan to increase prices over the next three months, the highest
since Q4 2022.
And it would appear that the cost of employing people is a major factor in
this inflationary pressure, with 86% of companies in the region citing labour
costs as a significant and worsening issue. This is eleven percentage points
higher than the UK figure of 75%.
Russell Borthwick, Chief Executive at Aberdeen & Grampian Chamber of
Commerce, said: “The Labour Government came to power promising to grow the
economy and be a friend of business.
“Six months in, the reality is feeling very different for firms across the
UK, and many of the challenges appear to be magnified for companies operating
in the North-east of Scotland.
“The results of this survey – which is the first opportunity for our
membership to pass judgment on the new government – are a damning indictment of
policies being pursued on energy, employment, and tax.”
He added: “Firms of all shapes and sizes are telling us the national
insurance hike is particularly damaging. Businesses are already cutting back on
investment and say they will have to put up prices in the coming months.
“The Government is rightly coming up with long-term strategies on industry,
infrastructure, and trade. But those plans won’t help businesses struggling
now.”
Findlay Anderson, a partner at Gilson Gray, said: “Only 27% of North-east companies are projecting profit growth in
the next quarter – a four-year low that compares unfavourably to the 40% of UK
respondents anticipating profit increases.
“More than half of respondents in our region expect profitability to decline
during this period, compared to less than a third across the UK.
“For some time, we have been forecasting the negative impacts of successive
governments’ policies and taxation on the North-east’s oil and gas industry.
Over the past few quarters, this has translated into a gradual but undeniable
decline in local business economic confidence.”
Shevaun Haviland, Director General of the British Chambers of Commerce,
said: “To help businesses, we need to see quick action in three specific areas.
Firstly, ministers should accelerate business rate reform to create a system
that incentivises investment.
“We also need the Government to speed up infrastructure investment, to help
SMEs in supply chains across the country. Finally, it’s crucial to support
exports, prioritising a better trading deal with the European Union.
“Without urgent Government action to ease the pain on businesses, the
challenging economic landscape will get worse before it gets better.”