Challenges ahead for Scottish businesses

Challenges ahead for Scottish businesses


While the last few years have been extremely challenging for the Scottish economy and Scottish businesses, political appetite for another independence referendum seems to have re-emerged over the last few days. As a consequence, it does look as though the next few years will also be extremely challenging especially when you throw Brexit into the mix. Even though the SNP lost a number of seats at the last election the party seems determined to try and push for yet another independence referendum.

There are also many other factors to take in the consideration for businesses operating in Scotland which include:

Business rates

While there is no doubt that the SNP is now looking to fix the issue of Scottish business rates, which has been a debacle since the changes were announced, there is an argument that enough is not being done. We’ve already seen many small and medium-size businesses go to the wall and the impact of increased business rates on larger companies should not go unnoticed. While many small to medium size businesses continue to challenge their new business rates, there are concerns that larger companies will cut back on investment in Scotland in the short to medium term.

It is all good and well the politicians raising more and more money to support public services, but at what cost? Many businesses have already gone to the wall, large companies are cutting back on investment and this is not exactly attracting new businesses to Scotland.

Underperforming economy

The Scottish economy is heavily linked to oil and gas as well as green technology which makes for an interesting riddle. Exactly how a government can support the oil and gas industry while pushing for significant investment in green technology is a little difficult to understand. What we do know is that the Scottish economy is underperforming the rest of the UK and this is unlikely to change in the short to medium term. The politicians will cherry pick certain performance figures to highlight “outperformance by Scotland” but the general consensus is that the Scottish economy is struggling, business confidence is low and the country is losing more and more business to the rest of the UK.

While the politicians continue to bicker there are serious concerns that the economy will struggle in the short to medium term with further underperformance expected. The issue of independence and EU membership going forward is a real concern for many businesses in Scotland and political parties in Scotland and Westminster are doing nothing to calm these fears. As a consequence, a lack of direction, lack of confidence and so much confusion will not help the Scottish economy in the short to medium term.

The online revolution

Only a few weeks ago we had the UK government arguing with their Scottish counterparts with regards to the roll-out of superfast broadband in Scotland. Such were the concerns of the UK government that they have decided to bypass the Scottish government and directly fund local councils to implement what has been a difficult phase of the superfast broadband rollout. This has caused major rows with the SNP who seem determined to use such actions by the UK government as an excuse for independence. The simple fact is that unless Scotland does roll out superfast broadband as soon as possible there will be difficulties, the Scottish business sector will fall behind the rest of the UK and it will be difficult to play catch-up in the years ahead. So, rather than bickering, all political parties should come together for the good of the Scottish business community and ensure superfast broadband is rolled out as soon as possible.

Threat to funding

While all political parties tend to talk about significant funding for small to medium-size businesses, how much of this hot air actually turns into solid finance? If we look at the massive increase in activity within the crowdfunding sector does this suggest that government funding is harder to obtain with not as much money around? There is also the threat that funding for certain businesses in Scotland could be curtailed in light of Brexit even though the UK government is talking with their Scottish counterparts about further devolution of financial powers.

At this point it is worth mentioning that income tax powers have been with the Scottish government for some years now and only recently did they decide to use them. Scotland is now the highest taxed area of the UK and despite the SNP suggesting further funds will be used to reverse public service cuts where does this leave businesses? Higher income tax, together with talk of higher corporation tax, leaves significantly less money to be spent within the Scottish economy. This can only be “challenging” for the Scottish business community.


Many in the business community had hoped that the independence referendum in 2014 would be “the last in a generation” as promised by the SNP. Unfortunately, as politicians often do, Nicola Sturgeon has gone back on her word using Brexit and the Barnett formula as a stick with which to beat the UK government. The problem is that independence always seems to be on the table when the SNP are in power and this causes major concern and confusion in the business community. Indeed if we look back to 2014, the pro-independence lobby led by the SNP did not even have a clue as to what currency Scotland would use.

Suggestions that the Bank of England would be forced to support an independent Scotland were simply laughed out of court and the suggesting that Scotland would walk away from its liabilities as part of the UK sent a ripple of concern across money markets. It seems inevitable that the SNP will over the next decade or so push for independence yet again. What also seems inevitable is that the number of seats held by the SNP in the Scottish parliament will fall again at the next election. So, are Nicola Sturgeon and the SNP running out of time to call a new independence referendum? Is this the last flick of the tail of a dying animal?



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