If it isn’t too distant a memory now, we’d like to start this week by wishing all of our members a happy and prosperous New Year. If you managed to have a break over the holiday period, we hope this was restful and enjoyable, and that you, like us, are rejuventated and ready for the challenges and opportunities of the year ahead.

We start our first Insights piece of the year focussing on an issue which we know is front and centre amongst members of every size and sector – business confidence. Alongside the entire British Chamber of Commerce (BCC) network, the Edinburgh Chamber want to see Government take action in three areas to ease “a pressure cooker of rising costs and taxes” which has led to a slump in business confidence.

BCC has carried out the largest poll of business sentiment since the Chancellor’s October Budget – and it clearly shows that concern around tax, including national insurance, has spiked, that concerns remain around inflation and interest rates, and that business confidence and investment has slumped. We would therefore like to see a speeding up of reform of business rates to create a system that incentivises investment, accelerated investment by Government in critical infrastructure, and helping exporters through improved trading arrangements with the EU.

The latest BCC quarterly survey shows 63% of firms – up from 48% in the previous quarter – have cited tax as a worry. Tax is now the biggest cause of concern for businesses. Worry about inflation and interest rates remains at similar levels to the previous quarter, up one per cent to 47% and down a similar amount to 28% respectively.

The high costs of doing business also translates into strong expectation of further price increases, with 55% of companies expecting to raise prices in the coming months, and only 2% expecting to cut.

All in all, business confidence has declined significantly with 49% of companies expecting turnover to increase over the next year, a fall of seven per cent since the previous quarter, with retail and hospitality sectors at just 39% and 42% respectively. The anxiety is not limited to turnover, with only 40% expecting to become more profitable, down by eight per cent. Confidence levels are at their lowest since the Truss/Kwarteng mini-budget in late 2022.

In turn, that has led to a reduction in the number of businesses who are planning to invest, down three per cent to 20%.

With all of these concerns in mind, we also look towards the Governments proposed Employment Rights Bill making its’ way through Parliament, current plans for which risk adding further cost. So while we remain supportive of the UK Government’s long-term strategies on industry, infrastructure, trade and employment rights for all, we believe there is a pressing need for short-term action to ease the current crisis in the business environment.

We’d like to hear from you on any issues you have in any of these areas. As ever, please contact our Policy Team.