The Chambers’ Quarterly Economic Indicator is Scotland’s longest-running business survey, operating since 1990. Conducted between August 21 and September 18 2023, the respondents to this survey were 93% SMEs, businesses with less than 250 employees.

In particular, it found that concern over interest rates has seen a significant increase, rising from 37% of firms last quarter to now half of firms, marking a five-year survey high.

Speaking on this, Stephen Leckie, Scottish Chambers of Commerce’s president, said: “Our data shows that firms are becoming more concerned of rises in interest rates, which are designed to suppress consumer spend and make borrowing more expensive, both of which significantly impact firms.

“Looking ahead, we would urge the Bank of England to provide clarity on the future direction of interest rates or begin to allow time for the lag between rate hikes and the full effect on spending to be fully observed, so that there is less risk of causing unnecessary economic damage.”

Relatedly, while worries about inflation remain high among all respondents, it eased generally over the quarter down to 70% from 75% in the last quarter.

The Chambers’ latest survey also uncovered that while more Scots firms continue to report rises in investment than falls on balance, over half (55%) have reported no changes to total investment, another five-year high.

“Scottish firms and indeed firms across the UK are actively pausing investment decisions,” said Leckie.

“Businesses urgently require upcoming fiscal events to provide some respite for those struggling to survive and incentives for those looking to expand.

“To that end, we urge the Scottish Government to use the progress made through the New Deal for Business to demonstrate that it can listen to business and take action that will support growth, such as maintaining a fair personal taxation regime, reviewing non-domestic rates, and reducing regulation.”

While on the matter of investment, the data also shows that over half of firms (57%) have reported no changes to training investment levels, yet another five-year survey high.

More positively, fewer Scots firms indicated that they will raise prices this quarter compared to last, with just under half of firms (48%) saying they will raise prices compared to 55% last quarter.

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Remarking on the survey’s results as a whole, Leckie stated that “These results indicate challenging trading conditions for firms, with inflation, interest rates, and labour shortages preventing growth and delaying investment. For too many businesses, the priority is firmly stuck on survival.

“Whilst business confidence is starting to pick up from the low levels of 2022, this renewed optimism is not translating into sustained performance and output from firms necessary to get our economy firing again.

“If Scotland is to maintain its competitiveness domestically and internationally, direction and impetus is needed from government north and south of the border in upcoming budget statements. These must outline clear steps to support business which instil confidence for investment and help stimulate growth.”