• Accessing capital to fund growth plans is one the biggest challenges for more than a quarter (28%) of Scottish businesses
• Declining customer demand continues to be a top challenge for just over a fifth (21%) of regional businesses
• Despite difficult trading conditions, almost half of Scottish businesses (49%) feel more confident about their business prospects this year, compared to the second half of 2023.

Accessing capital to fund growth plans remains one of the biggest challenges facing Scottish businesses over the next six months, according to accountancy and business advisory firm, BDO.

BDO LLP’s latest bi-monthly Economic Engine survey of 500 mid-market businesses, has revealed that more than a quarter of regional businesses (28%) are struggling to secure funding, whether that’s through bank loans, private equity, private credit loans, or government grants.

The survey of mid-sized businesses has shown that despite inflation easing in recent months, reaching its lowest level for more than two years, regional businesses are still suffering from inflationary pressures. Just over a fifth of Scottish companies (21%) said declining customer demand, triggered by consumers spending less due to ongoing high living costs, as well as an increased number of B2B customers going out of business, was impacting their bottom line.

Rory McPherson, BDO partner in Scotland, commented: “Inflationary pressures continue to be a significant thorn in the side of Scottish businesses, with many still feeling the effects of stubborn energy costs and rising wage bills, amongst other things. As a result, access to capital is absolutely key to allowing these businesses to grow, but it is clear that there needs to be significant improvements in this area.

“Despite trading conditions remaining difficult, the outlook for businesses is starting to shift. According to our survey, almost half of Scottish businesses feel more confident about their business prospects this year, compared to the second half of 2023 when the UK recorded a technical recession.

“It is positive to see some optimism, but Scottish businesses cannot achieve their growth ambitions alone. The political landscape is still unclear but, whatever the outcome, businesses need to see better access to capital and more progress on levelling-up high up on the list of priorities.”