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Has 25 years of devolution benefited Scottish businesses?

  • June 2024

This year marks 25 years of Scottish devolution. The Understanding Business survey asks firms if it’s been a good thing for business.

The latest Understanding Business survey reveals continued rising optimism among Scottish businesses

The report also delves into business attitudes towards devolution and the appetite for increasing devolved powers, like introducing metro mayors.

This year marks 25 years of Scottish devolution, which resulted in more power being devolved to the reinstated Scottish Parliament. When businesses were asked whether they thought that devolution has improved conditions for them, nearly half (44%) believe it has, while a third (33%) believe conditions worsened as a result of the devolution arrangements.

The latest Understanding Business report also indicates that two in five (40%) respondents believe the Scottish Parliament should have more powers related to investment and funding to support economic development.

Along with questions on devolution, the survey consulted businesses on the potential for English-style metro mayors in Scotland, and their potential for promoting economic growth. Just under half (46%) of respondents agree that metro mayors could promote economic growth to some degree, while 21% disagree. The highest support was recorded in Aberdeen and the North East at 68%.

Understanding Business is an independent quarterly survey of over 500 businesses across Scotland produced by research specialists Diffley Partnership and strategic communications and public affairs agency 56° North. The survey includes businesses of all sizes and from every region of Scotland.

While businesses remain largely pessimistic about economic conditions, it seems an increasing number are becoming cautiously optimistic. Overall, 38% of respondents believe that business conditions will be worse over the next 12 months, which is down from 45% in March, and only 26% of respondents believe conditions will improve.

Recruitment levels have remained steady over the past year, with 47% of surveyed businesses having attempted to recruit in the past 3 months. Over the last quarter, the key challenge businesses faced when recruiting were skills shortages (57%) and a lack of suitable applicants (48%).

Businesses exhibit growing confidence in future profitability and turnover. 39% anticipate an increase in turnover, up from 37% in March 2024, and 35% expect improved profitability, up from 33%.

Concerns about inflation have decreased significantly from 52% to 39% since March 2024. However, concerns about taxation have risen slightly from 44% to 49%. Reduced taxation (43%), reduced business rates (34%), and increased support for business owners (28%) are identified as top interventions for growth.

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