Policymakers warned about cost pressures on firms – Daily Business

Policymakers in Scotland have been warned that cost pressures, such as taxes and regulatory burdens, are putting the viability of thousands of businesses at risk.

A survey by legal firm Aberdein Considine found more than 80% of SMEs in Scotland believe their business may not survive the next year.

More than a third (37.16%) named Scottish Government policy changes as the biggest challenge to business growth, while 62% said the lingering impact of Brexit was a key concern.

Respondents reported that ongoing policy shifts have created difficulties in planning and investment, with widespread concern about the impact of regulatory uncertainty on their ability to grow and operate effectively in the current environment. 

Partner Ritchie Whyte said: “Our survey’s findings paint a picture of a very challenging environment for Scotland’s small to medium-sized businesses.

“We know that businesses are facing intense financial pressures, and the fact that over 80% of firms now doubt their viability demonstrates the urgent need for targeted support, policy intervention and sustainable strategies to ensure not only their survival, but long-term resilience. 

“Perhaps most telling is that more than a third of SMEs point to Scottish Government policy shifts as their biggest obstacle to growth.

“In practice, this means every tax or regulatory change can feel like an extra weight at a time when firms can least afford it. With less than a year to the next Holyrood election, we hope policymakers will take note. The pace of change must be managed carefully if businesses are to have the confidence to invest and expand. 

“While the findings show that a significant number of Scottish SMEs – many of which are family-owned and run – are facing real concerns about viability in the short term, they also point to a business community actively planning for the future”.  

The survey found an overwhelming majority of smaller firms (90.52%) want to see their employees back in the workplace despite other surveys revealing demands for greater flexibility.

A report earlier this year by the CIPD found that about 83% of UK companies offer hybrid working, with 45% having a formal hybrid working policy and 24% having a more informal approach. Three out of five employees had flexible working arrangements.

The Aberdein Considine survey suggests a shift may be taking place in workplace planning, with the majority of businesses indicating a move away from hybrid or remote arrangements.  

Mr Whyte said the high number prioritising a return to full-time office working “seems to run counter to broader workforce trends, but it perhaps highlights a focus across the industry towards strengthening collaboration and enhancing productivity.” 

Robert Holland, head of employment law at the firm, said that “five years after the pandemic we are back to a situation where firms want [the workplace] to be the norm.”

However, he admitted that the data could point towards some tensions between employers, employees and prospective employees.

The survey found that more than half (52%) of Scottish SMEs plan to invest in sustainability and ESG initiatives over the next 12 months, though again other surveys suggest firms are easing up on their commitment to green initiatives because of cost pressures and a weakening of commitment by the authorities.

New data published this week by Scotland Food & Drink shows that more than a quarter (27%) of businesses in the sector still have no Net Zero goals.

The research also found that almost a third (31.7%) of food and drink businesses had received no Net Zero support.

A major barrier to developing and implementing Net Zero initiatives within businesses was the availability of financial support, with 73% of food and drink businesses identifying it as either ‘challenging’ or ‘very challenging’.

Another survey by CRIF, a European provider of consumer and credit information, found that finance professionals in the UK now expect their companies’ leaders to focus less on sustainability and diversity commitments in the future.

The findings show that more than half (56%) of senior financial professionals in the UK now believe their leadership will place less focus on environmental, social and governance (ESG) principles over the next five years.