By Ian McConnell
SCOTTISH businesses are the least confident in the UK, flagging skills shortages and staff turnover as growing problems, a survey shows.
Overall, Scottish business confidence remains in positive territory. The survey of members of the Institute of Chartered Accountants in England and Wales working north of the Border shows Scottish businesses are overall more optimistic about economic prospects facing them in the coming year, relative to the past 12 months.
However, the business confidence index has dropped to 12.4 this quarter, from 16.3 in the opening three months of this year. And it is sharply lower that the reading of 42.2 for the fourth quarter of 2021.
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The fall in confidence occurred even though ICAEW’s survey showed companies in Scotland recorded a 7.1% increase in domestic sales over the year to the second quarter, the strongest rise since the survey began in 2004, with the forecast for the next 12 months also strong.
The UK business confidence index, at 18.6 in the latest survey, is down sharply from a peak of 47 three quarters ago, ICAEW noted, adding that cost pressures and staff shortages were “hampering expectations of a more positive outlook”.
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ICAEW said the proportions of companies in Scotland reporting the availability of non-management skills and staff turnover as growing problems were “significantly above the nation’s historical average”, at 43% and 42% respectively.
David Bond, ICAEW director for Scotland, said: “While our businesses will be buoyed by record domestic sales growth, they’re aware this growth could easily be derailed by challenges ahead like supply-side problems, skills and recruitment, as well as the economic threats posed by the cost-of-living crisis and soaring inflation.”
For 39% of Scottish firms, the availability of management skills was a challenge, a greater proportion than in any other part of the UK, ICAEW noted.
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