02 Sep 2022
Ahead of the new Prime Minister taking office next week, the Scottish Chambers of Commerce (SCC) highlights the priorities for the PM’s first day on the job.
The threat of recession
The Bank of England projects that the UK economy will start to contract in the final quarter of 2022 and continue to contract until the end of 2023. It is very likely that recession is already underway, as businesses pull investment and see their costs mounting higher every day, suppressing both confidence and growth.
SCC’s most recent research indicated that 8 in 10 firms saw energy costs as their top cost concern. Energy bills have already and will continue to fast outstrip the income of businesses and households, putting them into severe hardship and endangering our future prosperity.
Tackling the energy crisis and the impacts that it is having on businesses and households must be the top priority for the new Prime Minister.
The threat of inflation
Already record high levels of UK inflation are only projected to increase this year and into 2023.
In SCC’s most recent research, nearly 9 in 10 Scottish firms for Q2 2022 told that us that inflation was their most significant concern, which had tripled since the same quarter in 2021.
The longer that this persists, the more businesses are forced to adapt to survive. This unfortunately includes raising the prices that they charge for goods and services, a record number of firms (77%) told us in Q2 2022 that they would be raising their prices in this quarter.
With the energy crisis and inflation supressing consumer spend, businesses are facing down the barrel and are telling us that they have no choice but to increase prices, highlighting the scale of the challenge they face.
Commenting, Dr Liz Cameron CBE, Chief Executive of SCC, said:
“I have consistently heard from businesses of sleepless nights and fears they will not survive this winter due to looming increases in their uncapped energy bills. Government inaction to deal with the threats of rising energy prices for businesses has contributed to a perfect storm of pressures for firms.
“This is squeezing profits and placing economic recovery into question, forcing firms to cut or hold back on investment, put projects on hold, and delay hiring if they can even find the right people. The new Prime Minister must relieve the burdens on businesses and households on day one of the job.
“Businesses are at breaking point, putting jobs and livelihoods under severe threat. An imminent recession will add to growing fear and nerves among firms in Scotland of a protracted economic downturn. The time for action has never been more urgent.
“As the votes are counted and the outcome announced on Monday, the next Prime Minister must meet the moment and announce an emergency UK budget which relieves the pressure on businesses and households.”
