Economic growth continues to stagnate despite slight improvements, report finds
The Scottish Chambers of Commerce’s latest economic indicator shows concerns from businesses eased slightly at the end of 2023.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Ministers have been told to address “stagnant” economic growth as figures from the Scottish Chambers of Commerce (SCC) show businesses face continued pressure from inflation, investment and cashflow.
The quarterly economic indicator for the final months of 2023 shows concerns from predominately small and medium firms have “eased slightly”.
Inflationary concerns fell to their lowest in all of 2023, sitting at 52%, compared to 75% in the previous quarter.
However it is still 20 percentage points higher than the 32% recorded in the first quarter of 2021.
While on balance more firms report an increase in investment than falls, more than half continue to report no changes.
These latest survey results paint a clear picture: Scotland’s economic growth is stuck in a low growth cycle
The survey, conducted between November 6 and December 4, received 420 responses, with 95% coming from small to medium businesses with less than 250 employees.
Stephen Leckie, president of the SCC, said: “These latest survey results paint a clear picture: Scotland’s economic growth is stuck in a low growth cycle.
“Persistently high inflation, higher borrowing costs, frozen investment and ongoing global uncertainty are placing businesses under significant pressure.”
He said businesses will now be asking questions as to why the Scottish Government did not replicate business rates reliefs introduced south of the border.
He added companies will be “grappling with the increased tax burden of working in Scotland, making it more challenging to retain and attract talent” following the introduction of a new income tax band.
“Anyone in Scotland who makes more than £28,850 will now pay higher taxes than workers elsewhere in the UK,” he added.
However, prices increases appear to stabilise with 40% of respondents indicating they will raise prices in the next quarter compared to 48% in the previous quarter.”
Joao Sousa, deputy director of the Fraser of Allander Institute, said: “Scotland might not be in a technical recession, but growth has remained subdued, in a stop-start pattern since the beginning of 2022.”
He added the 2024 prospects are a “little more positive” than 2023, leading to “confidence” of sustained economic growth for the year ahead.
Scottish Conservative business spokesman Murdo Fraser said: “This is yet another influential group representing Scottish business to join the chorus begging the SNP to address the stagnant growth that has persisted through their time in Government.
“Without investment and increased productivity, Scotland’s economy cannot grow, and basic services will be unaffordable.
“Yet the SNP’s response has been to increase tax, which the SCC rightly warns will reduce competitiveness and reduce the spending power of households and firms already struggling with a cost-of-living crisis.
“Rather than listen to businesses, it is hampering them with yet more regulation and legislation.
“The SNP should heed this warning from Scotland’s largest business network and urgently revise their policies.”
Scottish Labour economy spokesman Daniel Johnson said: “Businesses are struggling with high inflation, flatlining investment and a workforce crisis – but our two governments have no answers.
“Both the SNP and the Tories have presided over a low growth, low pay economy that is failing businesses and workers alike.”
Wellbeing Economy Secretary Neil Gray said: “I agree with the Scottish Chambers of Commerce assessment on Scotland being in a low growth cycle.
“We remain locked into the UK Government policy-making decisions that the Resolution Foundation says have doubled the productivity gap with France and Germany since 2008 and given the UK stagnant wages, inequality levels that make a typical household income £8,300 worse off and an economy that is 2.5% smaller than it would have been in the European Union.
“That is while Scotland’s economy has experienced faster earnings growth than the rest of the UK in 2023, 4% greater gross domestic product growth per person, and double the UK’s annual productivity growth since 2007.
“For Scotland to truly reach its economic potential and match the growth, productivity and wider economic performance of our European neighbours, we need to take our place as an independent nation in the EU.”