Seven in ten Scottish firms have said they are set to put up their prices as businesses north of the border raise record levels of concern over inflation.
According to the Scottish Chambers of Commerce’s latest business survey, firms are also starting to feel the impact of reduced spending as consumers tighten their belts and disposable income drops, hitting cashflows and profits.
Stephen Leckie, president of the chamber, warned: “Firms are becoming increasingly anxious about rising inflation, energy prices and cost pressures.
“For too many businesses, the focus is still simply and survival.”
The report, which operating since 1990 is the longest running economic survey of its kind, said the period of strong growth is now levelling off and retail footfall remained considerably below pre-pandemic levels.
With inflation in the UK reaching highs not seen for decades, there is record concern among businesses about its impact, with many indicating they would up prices in response.
Some 70% of financial, business services and retail firms said they were concerned reported record high inflationary pressures, with 80% of tourism firms, and 90% of construction and manufacturing businesses telling the survey the same.
Meanwhile some sectors – retail, tourism, and construction – have reported a fall in cash flow and profits.
And the majority of sectors continued to report significant recruitment difficulties making their bounce back from the coronavirus slump difficult for many.
Mr Leckie said: “Businesses who have weathered the pandemic over the past two years are now seeing problems pile up, one on top of another, as they struggle with longstanding challenges linked to recruitment, planning and managing change and are now being hammered by surging energy prices, inflation and falling consumer spending.”
He said the “prospect of impending additional tax burdens” were a “further cause for concern amongst already hard-pressed businesses”.
“Economic growth is now plateauing because of these rising inflationary and cost pressures creating an increasingly uncertain outlook for businesses, with international trade and the global economy remaining volatile,” he said.
“Scotland is approaching a critical point in recovery. Businesses are struggling now.
“That is why the Scottish and UK Government’s need to urgently rethink the impact of new and increased taxes on business if the economy is to be given the headroom it needs to survive this crisis and grow.”
Mairi Spowage, director at the University of Strathclyde’s Fraser of Allander Institute, said: “Two years on from the first lockdown, it would be great to be optimistic about the economic prospects for 2022. Unfortunately, global uncertainties and the cost-of-living crisis, which are not unrelated to each other, have doused that enthusiasm with a bucket of cold water.”
A Scottish Government spokesman said: “We are doing all we can to ensure people, communities and businesses are given as much support as possible to deal with the rising cost of living.
“Many of the powers required to tackle these issues, including energy markets, are reserved to the UK Government, but the vital steps we proposed for the Chancellor’s Spring Statement were largely ignored.
“We are committed to supporting our businesses recovery and have provided more than £4.5bn in support since the beginning of the pandemic, including around £1.6bn in rates relief.”