There are few moments which I would class as era-defining in the political world. Nicola Sturgeon’s resignation is surely one of them.
Having outlasted four UK Prime Ministers and navigated Scotland’s response to the Covid-19 pandemic, we can all agree – regardless of political persuasion – that the First Minister has been a committed, dedicated and passionate public servant for Scotland.
Whilst we agreed and disagreed on economic policies, we always found common ground on the importance of promoting Scotland on the world stage. Our passion for ‘Brand Scotland’ and increasing exports to the world became our shared mission and we shifted the dial in getting more Scottish companies seeking out global markets and securing new orders.
But there is much more to do and the Chambers of Commerce Network will continue to build on this important progress with the soon to be agreed First Minister.
So as we look ahead to whoever becomes the next leader, a full in-tray of issues requiring immediate attention awaits them.
The business community will be closely watching the contest for the next leader of the SNP and eventual First Minister to assess their abilities on understanding the economic performance of Scotland and the UK and what levers they believe are required to correct its course.
After UK GDP shrunk by 0.3% in the third quarter, the economy registered zero growth in the final quarter of 2022. There is a clear imperative to prioritise economic growth and jobs as the economy registers flatlining performance as inflation remains high.
The news followed comments from the Bank of England at the start of February that, although it expected the UK will enter a recession this year, it will be shorter and less severe than the BoE previously thought. But the analysis remains pessimistic.
The National Institute for Economic and Social Research, an independent economic research group, says a large fall in living standards caused by surging inflation will leave millions of people struggling with their bills.
While the economy has technically managed to continue to stave off recession, growth has ground to a halt. For many, this year will feel like a recession regardless. The pressures on businesses will remain and could threaten the survivability of many firms.
Scottish businesses face increasing cost pressures and dwindling business confidence. Investment is largely on hold if not being paused entirely. Cashflow and profits are under strain. Firms are struggling to find avenues that lead to survival other than raising prices and trying to see it out.
The excessive cost of doing business and impacts of high inflation are set to persist. Despite government support, energy costs will also continue to trouble businesses and households, particularly when that support is rolled back from March.
Challenges around the labour market will also linger. While recent figures put employment at Scotland at a record high of 76.6%, recruitment difficulties remain persistent as businesses struggle in a competitive labour marketplace and others can’t find the skills that they need.
A recent survey by the Chartered Institute of Personnel and Development found that despite strong hiring intentions, more than half (57%) of employers said they have hard-to-fill vacancies. Many expect this problem to endure to either a significant (29%) or minor (36%) extent in the next six months.
The survey also suggested that the tight labour market will increasingly feed through into price rises for organisations’ goods and services.
These issues will not be solved overnight. Certainly, these issues cannot be solved alone. But urgency, action and partnership will be the watchwords that the next First Minister will be assessed on. These are the essential parameters for creating a business environment in Scotland which is growth-led, competitive and world-leading.
We are ready to work with the Scottish Government on the issues that matter to us all.
Ensuring quality jobs for all. A just transition that builds on our massive potential for Net Zero. Ensuring that economic growth is tied in with improving social equality and prosperity.
Only by working collectively as genuine partners can policy ambitions translate into practical delivery on the ground.
I was struck by Nicola Sturgeon’s use of the word “reset” in her resignation speech calling for a reset of our discourse. Since 2021, the business community has called for a ‘reset’ of the relationship between business and government after clear strains during the COVID-19 pandemic and policy announcements where unintended consequences hit Scotland’s prized sectors. Perhaps this is the moment where a genuine reset is possible.
Of course, whilst the business community stands ready to work openly and constructively, the onus is on the next First Minister to demonstrate their willingness and openness to work with us so we can collectively grow Scotland’s economy.
