Chris Harte

The biannual survey of Scottish corporates found that one quarter (25%) of respondents said their most recent financial year had gone worse than expected, up from 16% a year ago.

Meanwhile, almost half (47%) now identify a weak economy as the most important challenge facing their business, compared to 36% this time last year.

The findings suggest that, despite pockets of resilience, many businesses are still contending with sluggish economic conditions, cost pressures and geopolitical uncertainty.

Energy costs are emerging as a particular concern against the backdrop of increased volatility in wholesale oil and gas prices caused by tensions in the Middle East. Just 38% of Scottish business leaders said they currently hedge their energy costs, and over half (51%) report that rising fuel prices are already having a material impact on their business.

The survey also points to continued caution around growth and investment in the business community. Two-thirds (66%) said they do not expect to increase headcount over the next six months, while fewer than one in 20 (4.8%) identified entering new markets as a business priority.

Chris Harte, CEO of MFMac, said: “The figures suggest many businesses are settling in for another challenging year rather than expecting a significant improvement in trading conditions.

“The energy findings are particularly telling. Continued instability in the Middle East and disruption around key shipping routes are feeding through into wholesale prices and creating uncertainty for businesses here in Scotland.

“At the same time, most firms are focusing on stability rather than expansion. That points to a business community that remains pragmatic and resilient, but realistic about the economic pressures it expects to face over the next year.”

The View is MFMac’s biannual survey of Scottish business leaders. It is published every six months as a barometer of Scotland’s business landscape. By capturing the challenges and priorities of senior leaders, it aims to provide valuable insights to both the business community and policymakers at a time of economic change.