Crossing the border from Scotland to England moves from one of the highest cost environments in the UK to a far more competitive one, according to multiple reports. Across Scotland, businesses are in the grip of a relentless squeeze with costs rising, margins tightening, and confidence low, multiple reports indicate. The latest Quarterly Economic Indicator shows demand remains weak and revenues under pressure in Scotland.
The tax burden, rising labour costs, and energy costs are forcing businesses in Scotland to scale back rather than grow, with almost three-quarters expecting to raise prices in the coming months. Soaring energy bills in Scotland are among the highest in Europe, and increases to employer National Insurance contributions have made hiring new talent more costly. Measures such as the Small Business Bonus Scheme have provided some relief for firms in Scotland, and the Holyrood administration will receive an additional £900m of funding through Barnett consequentials following the Spring Statement.
However, the Energy Profits Levy is stifling investment in the North Sea, according to multiple reports. The retail sector and hospitality went through the mill during the Covid pandemic, Brexit, and the 'Beast from the East' weather event, multiple reports indicate. New UK trade deals, for example with India, will benefit the Scottish economy by about £200m a year with the whisky industry a key beneficiary, multiple reports indicate.
Retailers in Scotland are paying higher business rates compared to counterparts down south, according to multiple reports. Scotland continues to attract more foreign direct investment than anywhere in the UK outside London, multiple reports indicate. It takes 15 minutes to drive from Eyemouth to Berwick-upon-Tweed, according to major media.
The long-term implications of the Middle East crisis for retailers and the whisky industry in Scotland remain unclear, as does how many businesses have actually relocated from Scotland to England due to cost pressures. The current level of foreign direct investment in Scotland compared to previous years is also not specified.