Research by the Institute of Chartered Accountants in England and Wales (ICAEW) has shown that business confidence in Scotland has climbed to its highest-ever level.
The fourth quarter Business Confidence Monitor for Scotland for Q4 2021, from chartered accountancy body ICAEW, found that respondents were at their most confident since the research began in 2004.
There has been a recovery in sales over the past year, with expected further increases in the coming months.
Businesses in Scotland saw their domestic sales rise by 2.8% year-on-year, while exports rose by 1.3%.
More growth is expected and domestic sales are forecast to rise by 5.6% in the year to the fourth quarter of 2022. Export growth is also projected to pick up at 4.4% - a stronger outlook than the UK average.
As the economic recovery continues, businesses said that they planned to increase staff levels at the highest rate seen in three years.
Average salaries were also forecast to increase, following very limited growth during the pandemic, as labour market conditions tighten.
Challenges for businesses are posed by the fact that as well as rising labour costs, input prices are increasing for businesses at a faster rate than the UK average. This reflects rising demand both domestically and internationally, higher energy and commodity prices, disruptions to supply chains, and transport shortages. Another reported challenge is hiring for non-management positions.
As a result of cost increases, businesses increased prices they charged customers by 1.6% over the last year, with a further rise of 3% expected for the year ahead.
A fifth of Scottish companies expressed concerns over the UK Tory Government’s plans for higher corporation tax rates - which the SNP believes to be poorly timed during COVID recovery - and the cost of increased National Insurance contributions for the Health and Social Care Levy.
Kenneth Gibson MSP said:
“The SNP Government continues to support businesses across Scotland through measures like business rates relief, financial support schemes like the Ventilation Business Fund but also helping to address employment challenges through upskilling, apprenticeships and more.
“It’s good to see this level of faith in Scotland’s businesses as it indicates that we’re on the right track when it comes to COVID recovery.”
58 Chartered Accountants in Scotland responded to a telephone survey between 19 July and 15 October.