Scottish businesses plan investment and recruitment to aid recovery
According to the data from our latest Rethinking the Economy survey medium-sized businesses in Scotland feeling a little more optimistic about the recovery of the local economy.
47% are looking to recruit more permanent staff over the next six months, with another 47% planning temporary recruits.
Investment plans also received a boost in the March budget. A third of businesses in Scotland are planning new investments following the “super deduction” initiative, which allows companies to cut their tax bill by up to 25p for every £1 they invest.
There is cause for further optimism as 80% expect revenues to return to pre-pandemic levels within a year of the strictest restrictions being lifted. This is compared to a UK national average of 75% of companies expecting a recovery in the same time period.
That said, few businesses have come away from the crisis unscathed. Over a third (35%) of businesses stated that their business model or product line will change in light of the pandemic. Another third (33%) expect pricing of products and services to increase, likely reflecting a need to pay back debt or recover higher costs.
Reflecting on the findings Martin Bell, head of tax at BDO in Scotland said:
“Mid-sized businesses are the engine of the Scottish economy; they have often proven robust even during the most uncertain economic conditions. The resilience they have demonstrated over the past year will mean they are well-placed to drive growth and recovery following the vaccine roll-out and gradual lifting of restrictions.
“However, the strength of the mid-market economy can’t be taken for granted. These businesses need to be supported too. The results show that Government initiatives have been vital for this segment of the economy so far, but areas such as access to finance and support on supply chain disruption will be crucial in creating an environment that allows these businesses to thrive in the long-term.”
Mid-sized, PE owned and AIM listed businesses, what BDO calls the economic engine, account for less than 1% of businesses overall but contribute £1.4tn in revenues and provide one in four jobs. In the five years leading up to the start of the pandemic, these businesses grew revenues by 46% despite Brexit-related uncertainty.
The role of the economic engine in the UK’s wider economic recovery should not be overlooked. In 2015, the CBI estimated that the growth of just 3,000 mid-sized firms from 2010 to 2013 was enough to drag the country out of recession and into growth after the financial crash. If more firms had rebounded quickly and hit pre-recession growth rates, then it could have added tens of billions of pounds to the UK economy.
If you would like to discuss any of the findings from our latest report please get in touch.