Businesses continue to feel misunderstood by government and are falling well short of government net zero ambitions, according to the Fraser of Allander Institute.
Its third quarter business monitor reveals 40% of Scotland’s businesses have made no financial, operational, or strategic preparations to hit net zero targets.
Worryingly, it says, nearly half of all firms are not prepared financially, “implying a lack of understanding of how to finance the transition”.
Only a small share of businesses report being in the planning stage, suggesting few of the unprepared firms are progressing toward readiness.
Fewer than 1 in 20 consider themselves fully prepared, though the report notes that this is not surprising, given the Scottish and UK Governments’ targets are in 2045 and 2050, respectively.
Relations with the Scottish Government have improved since last year, but businesses feel less able to influence policies which affect them.
The share of companies believing the Scottish Government understands the business environment rose from 8.6% last year to 11.8% this year, and engagement with businesses improved from 5.6% to 11.5%.
However, the share of businesses who feel they know how to influence Scottish Government policy declined from 18.6% last year to 14.1% this year.
It says this “may suggest the Scottish Government has improved at communicating with businesses but has been less effective at including firms in policy decisions.”
The findings are consistent with a recent survey by the Diffley Partnership and Charlotte Street Partners which found a low level of connectivity between businesses, politicians and civil servants.
The Fraser of Allander monitor also revealed that all six of its key indicators remain deep in negative territory.
Businesses continue to face a challenging environment, with rising costs, subdued investment, and displaying increasingly cautious sentiment.
Cost pressures have eased slightly but are still a significant issue, with 4% of respondents reporting higher total business costs this quarter. Looking ahead, cost pressures are expected to persist, with 80.1 percent expecting total business costs to increase in the next six months.
Total employee costs remain the most significant component cost pressure in Q3, and energy costs are expected to become a rising cost pressure over the next two quarters.
Uncertainty dominates ahead of the UK Government’s Autumn budget. Economic and political uncertainty ranked as more concerning than traditional elements, such as staff and credit availability.
João Sousa, deputy director at the Institute, said: “Businesses are still relatively pessimistic about the economic outlook, with cost pressures remaining high and uncertainty surrounding the Chancellor’s upcoming budget.”
The SNP said mounting cost pressures were a result of Labour’s tax on jobs with record high costs of hiring staff.
#Businesses #falling #short #net #targets #Daily #Business