Scottish businesses are aiming for a productivity boost and growth in 2024, according to a survey conducted by the Scottish Chambers of Commerce (SCC) and the Fraser of Allander Institute (FAI) . The survey, which covers the fourth quarter of 2023, reveals that business confidence has improved across most sectors and that businesses are planning to invest more in innovation, skills, and technology.
Business confidence rebounds after pandemic challenges
The survey shows that business confidence has rebounded from the negative levels recorded during the Covid-19 pandemic, which had a severe impact on the Scottish economy. The survey measures business confidence as the difference between the percentage of firms expecting an increase in turnover and the percentage expecting a decrease. The overall business confidence score for the fourth quarter of 2023 was +18, up from +11 in the previous quarter and -22 in the same quarter of 2020 .
The survey also indicates that most sectors have seen an improvement in confidence, with the exception of tourism and hospitality, which remained negative at -9. The sectors with the highest confidence scores were manufacturing (+32), construction (+28), and financial and business services (+25) .
The improvement in confidence reflects the recovery of the Scottish economy from the pandemic-induced recession, as well as the easing of Covid-19 restrictions and the progress of the vaccination programme. According to the latest official statistics, the Scottish economy grew by 1.3% in the third quarter of 2023, following a 4.6% growth in the second quarter . The Scottish economy is now 1.4% above its pre-pandemic level of output, while the UK economy is still 0.5% below .
Businesses plan to invest more in innovation, skills, and technology
The survey also reveals that Scottish businesses are planning to invest more in innovation, skills, and technology in 2024, in order to boost their productivity and competitiveness. The survey measures investment intentions as the difference between the percentage of firms expecting to increase their investment and the percentage expecting to decrease it. The overall investment intentions score for the fourth quarter of 2023 was +12, up from +8 in the previous quarter and -16 in the same quarter of 2020 .
The survey also indicates that most sectors have positive investment intentions, with the exception of tourism and hospitality, which remained negative at -8. The sectors with the highest investment intentions scores were manufacturing (+23), construction (+19), and financial and business services (+18) .
The survey also asked businesses about their priorities for investment in 2024. The top three priorities were innovation and research and development (cited by 41% of businesses), staff training and development (cited by 38% of businesses), and information and communication technology (cited by 36% of businesses) .
The survey also asked businesses about the barriers to investment they face. The top three barriers were uncertainty about future demand (cited by 45% of businesses), availability of finance (cited by 31% of businesses), and skills shortages (cited by 29% of businesses) .
Businesses optimistic about growth prospects in 2024
The survey also shows that Scottish businesses are optimistic about their growth prospects in 2024, despite the challenges posed by Brexit, inflation, and supply chain disruptions. The survey measures growth expectations as the difference between the percentage of firms expecting an increase in turnover and the percentage expecting a decrease. The overall growth expectations score for the fourth quarter of 2023 was +23, up from +18 in the previous quarter and -14 in the same quarter of 2020 .
The survey also indicates that most sectors have positive growth expectations, with the exception of tourism and hospitality, which remained negative at -7. The sectors with the highest growth expectations scores were manufacturing (+35), construction (+31), and financial and business services (+28) .
The survey also asked businesses about the factors affecting their growth prospects in 2024. The top three factors were domestic demand (cited by 55% of businesses as a positive factor and 25% as a negative factor), international demand (cited by 32% of businesses as a positive factor and 23% as a negative factor), and costs and prices (cited by 16% of businesses as a positive factor and 54% as a negative factor) .
Conclusion
The survey conducted by the SCC and the FAI provides a snapshot of the views and expectations of Scottish businesses for the fourth quarter of 2023 and the year ahead. The survey shows that Scottish businesses are aiming for a productivity boost and growth in 2024, after overcoming the challenges posed by the Covid-19 pandemic. The survey also shows that Scottish businesses are planning to invest more in innovation, skills, and technology, in order to enhance their productivity and competitiveness. However, the survey also highlights the uncertainties and risks that Scottish businesses face, such as Brexit, inflation, and supply chain disruptions.
