The number Scottish businesses planning to increase prices in the coming three months has hit a record high according to one of the country’s longest-running economic surveys.
Published this morning in the wake of yesterday’s resignation by Prime Minister Liz Truss, the latest quarterly economic indicator from the Scottish Chambers of Commerce (SCC) paints a grim picture of firms struggling against “increased input costs, inflationary hikes, mis-judged economic policy choices” and increased pessimism over the global economic outlook. SCC chief executive Liz Cameron said the departure of Ms Truss has further exacerbated a critical situation.
“We need business and government pulling in the same direction if we are to create economic growth that is badly needed across the whole of the UK,” Ms Cameron said. “This is how the next Prime Minister will be assessed by the business community.”
Faced with frozen investment, faltering confidence and falling cashflows, 80 per cent of firms questioned by the SCC said they intend to raise the prices they charge during the next quarter. This was a record high for the survey – which has been running since 1990 – and up from 50% who intended to raise prices in the same period a year ago.
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The rate of inflation, which has retuned to a 40-year high of 10.1%, was unsurprisingly the top concern cited by 92% of businesses. Energy bills topped the list of cost pressures (80%), followed by labour costs (72%) and fuel costs (63%).
Stephen Leckie, president of the SCC, said cashflow and profits remain weak across all sectors.
“The signs of an economic bounce back don’t look promising as more and more firms are telling us that they have been forced to cancel contracts, projects or plans to expand, due to soaring costs and difficulty in hiring people,” Mr Leckie said.
“Whilst we recognise the strain that has been placed on the public finances, governments in Edinburgh and London must make clear how businesses will be supported to survive through the difficult months ahead and what measures will be put in place to support long-term growth.”
However, Fraser of Allander director Mairi Spowage cautioned: “Given the mistakes that have been made by his predecessor, it is likely that [Chancellor] Jeremy Hunt will have to go further in terms of spending restraint and potential tax rises compared to what may have been the case without the chaos.”
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