FSB: Firms struggling with 'merciless' trading conditions

Firms in sectors such as retail and hospitality reported difficulties in recruiting and retaining staff

Mounting overheads, skills shortages and concerns about the economy have punctured Scottish business confidence, according to new research.

A survey by the Federation of Small Businesses found optimism slumped in the second quarter to its lowest level since the last three months of 2020.

The average Scottish business owner is now more pessimistic than the UK average.

The FSB said many firms were finding trading conditions "merciless".

More than 90% of 148 Scottish businesses surveyed reported an increase in costs in the second quarter.

Asked to identify the source of the rise, 73% pointed to fuel while 67% highlighted utilities.

Nearly three-quarters of respondents highlighted rising fuel costs

Access to skilled staff was raised as one of the biggest barriers to growth by nearly two in five respondents.

This was only behind concerns about the domestic economy which were cited by 59% of operators.

The research also found that 61% ran below capacity over the quarter.

'Overheads are rising'

FSB policy chairman for Scotland Andrew McRae said: "Across Scotland, many independent and local businesses are finding trading conditions merciless.

"Overheads are rising, and every penny spent at the pump or on energy bills is cash that can't be used elsewhere.

"Businesses in sectors such as retail, tourism and hospitality - especially in rural areas - are finding it difficult to recruit and retain staff.

"These factors mean that far too many businesses say they're operating at far from their maximum capacity, which in turn slows down their ability to recover from the hits they took over the course of the pandemic."

He added: "Whoever is next to get the keys to 10 Downing Street should prioritise measures to help local and independent firms face these challenges and play their part in economic recovery."