This week, there were a number of business surveys out trying to capture the sentiment of the business base as 2023 kicks off.
Our favourite one is, of course, our very own Scottish Business Monitor, which we produce every quarter in partnership with Addleshaw Goddard. Excitingly (well, for us at least!) this is the 100th edition of the Business Monitor, which has been running for 25 years.
Thank you so much to every business that has responded to our business survey over the years: without your support, we wouldn’t be able to have this valuable insight into the current activity, sentiment and outlook of businesses in Scotland. It also allows us to feedback on the latest views from businesses to policymakers.
So, what did the latest results tell us?
In the survey, we ask businesses to reflect on how the last three months went, and what their expectations are about the next six months.
In the face of what feels like unrelenting economic gloom, the good news is that despite a negative view of the last quarter of 2022, business sentiment for overall activity and turnover creeps into positive territory for the first half of 2023.
It is fair to say that our results vary considerably by the business size. For the very smallest businesses, so those under 10 people, sentiment is still negative: perhaps reflecting the additional worries smaller businesses have about coping with the reduced Government support for energy bills.
Despite this good news though, the outlook for capital investment and export activity remains very negative. Given the importance of investment and openness to drive productivity in the economy, this is a concern for the medium-term productive capacity of the economy.
Finance Committee publishes their reaction to the Scottish Budget
Following the publication of the Scottish Government’s Draft Budget in December, the next big milestone in the parliament’s consideration of the plans is the Finance and Public Administration Committee’s report, where they set out their reaction to the budget given the evidence they have taken over the past 6 weeks.
The 47-page report recognises a number of challenges that the Scottish Government faces in setting its budget for 2023-24, but also highlights significant concerns about how the SG is tackling these challenges. These concerns are particularly around the public sector workforce, plans for public sector reform, and how the Government are coping with increased capital investment costs, given it is likely that all their plans will no longer be affordable.
For example, the Committee say in paragraph 154:
“The Committee accepts that the immediate financial pressures have required a significant and concerted level of focus by the Scottish Government. The Deputy First Minister has confirmed that the next four years will also be “really tough on the public finances”. We acknowledge the significant challenges ahead, however, on the basis of the evidence we have heard, the Committee is not convinced that the Scottish Government is carrying out enough strategic long-term financial planning to ensure future fiscal sustainability, including in relation to how it meets its public service reform and social security commitments.”
The next stage for the Scottish Budget is the Stage 1 Debate in Parliament on 2nd February.
Busy week in parliament for us!
It has been a busy week in parliament for FAI colleagues. On Tuesday, we gave evidence as part of the Equalities, Human Rights and Civil Justice Committee’s budget scrutiny in relation to Human Rights budgeting. Have a look here.
On Wednesday, we were in parliament again, giving evidence to the Economy and Fair Work Committee as part of their enquiry into the disability employment gap – which you can catch here.
Come and join us to hear our new forecasts and reflections on the Scottish Budget….
Join us for an event on 8th February! We’ll be talking about our new forecasts, published that morning, and also reflecting on the Scottish Budget, focussing on some of the uncertainties that remain about the funding position for 2023-24.
The event will be hybrid, you can join us in person at the Scottish Storytelling Centre in Edinburgh or online via Zoom, 2 – 3.30 pm on 8th February. Please register your attendance: in-person or online.
For those joining us at the Scottish Storytelling Centre, registration, tea & coffee will be available from 13:30. We’ll be announcing some special guests next week!
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.
Emma is Deputy Director and Senior Knowledge Exchange Fellow at the Fraser of Allander Institute