The latest South of Scotland Business Panel Survey, carried out in June and July 2022, has revealed that 95% of the 600 businesses and social enterprises interviewed reckon rising costs were impacting operations.
Increased inflation and the war in Ukraine-Russia conflict also had an impact on business confidence, with 40% of respondents staying they were optimistic for the next 12 months, down from 52% during the previous survey in February and March.
Despite the challenges, 91% of those interviewed were confident in their own viability over the next six months.
Overall, there was a mixed outlook for the 12 months ahead, with most businesses and social enterprises (83%) taking at least one action in response to changes in their working environment.
The survey is carried out in partnership with the Scottish Government and Highlands and Islands Enterprise. It also showed that 56% felt issues attracting new talent were a risk to their business.
This was followed by skills shortages (54%), staff working at capacity (53%), ability to pay competitive wages (50%) and lack of permanent staff (45%).
The top three actions planned in response to changes in the working environment were using greener supply chains (47%), more locally sourced supplies (45%) and up-skilling or re-skilling staff (45%).
Among those that were up-skilling or re-skilling their workforce, the most sought-after skills were use of new technologies (78%), specialist or technical skills (68%) and digital skills (67%).
Breaking the data down into sectors, those focused on tourism were more likely than other sectors to still be operating below pre-pandemic levels. However, they had higher than average confidence in the economy and were more likely to be striving for growth.
Food and drink businesses have seen relatively stable performance over the last six months, but were less confident than average in the economy and more likely to have been impacted by rising costs, the Ukraine conflict and Brexit.
Meanwhile, more remote rural businesses were more likely than average to feel that skills shortages and lack of staff accommodation were risks to their business.
Jane Morrison-Ross, chief executive of South of Scotland Enterprise, said: “It is completely understandable that confidence has been impacted in the face of rising costs.
“However, it is also encouraging to still see optimism and resilience strongly evident amongst the businesses and social enterprises who took part in the survey.
“The results emphasise what our priorities should be now to help businesses and social enterprises through this difficult time, and for the next 10 years if we are to realise our shared ambition for a thriving South of Scotland.”
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