Scottish investment is running dry, with less than one in ten firms saying funding is ‘readily available’, according to the latest biannual survey from Morton Fraser MacRoberts (MFMac).

Polling 117 Scottish business leaders, the legal firm found that almost half (48%) reported that investment funds are either ‘scarce or very scarce’, triggering a swathe of companies to take on more defensive strategies to bolster their position in the market.

MFMac found that Scottish firms have gone into survival mode, with most tightening their margins (74%) and chasing operational efficiencies (65%), rather than growth. 

That’s a result of economic uncertainty still biting hard, with the latest official figures showing a measly 0.2% growth in Scotland’s GDP, a fall from the not much better figure of 0.4% in the previous quarter, and lagging very slightly behind the UK as a whole at 0.3%.

With that dismal economic outlook in mind, it’s unsurprising that a fifth (19%) of Scottish firms say that the current financial year is going worse than expected, and has left a limited appetite for growth. The survey found only 7% are in a position to explore exports, and just 22% are looking at diversifying into new products.

Adding to the woe, MFMac found an imminent hiring slowdown is on the cards, with few firms north of the border planning to add more than a handful of roles in the next six months, and most describing the state of the Scottish talent pool as ‘average’, opposed to ‘good’.

The one slight silver lining for Scottish workers is that business leaders don’t expect AI to make much of a dent, at least not yet. MFMac said that the ‘vast majority’ of business leaders expect AI to have a minimal impact on staffing, resulting in no more than a 10% change in headcounts over the next five years, while two-thirds anticipate no material change whatsoever.  

“In short: the economy’s flatlining, investment’s hard to come by, we’re finding ever more ingenious ways to squeeze more from less, and we’re desperate for both taxation relief and a few economic rocket boosters,” concludes the report. 

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MFMac’s findings are further evidence of a pessimistic attitude seeping into Scottish business, with the Fraser of Allander Institute’s latest Economic Commentary and Scottish Business Monitor finding that despite slight improvements in sales and employment, four out of five firms expect weak to very weak growth over the next twelve months.

“Scotland’s economy continues to face a fragile recovery, held back by uncertainty and data gaps that make it harder to target the right policy responses,” said Professor Mairi Spowage, Director of the Fraser of Allander Institute.

“Restoring business confidence and improving the quality of economic evidence must be central to future decision-making.”