‘Worrying picture’ for retail and tourism services over price rises

The retail and tourism industries have the highest number of firms in Scotland facing a hike in prices amid a widespread dip in business confidence, a new report has shown.

The latest data from a business report by the Scottish Chambers of Commerce (SCC), which looked at 310 firms in November and December last year, showed 82% of respondents said they intend to raise prices over the next quarter, a successive record high for the survey.

The report said the retail and tourism sectors had the highest number of businesses indicating future price rises, at 77% and 76% of firms respectively. A total of 94% of respondents were SMEs: businesses with fewer than 250 employees.

Stephen Leckie, President of the SCC, said the UK and Scottish governments need “to urgently support SMEs by providing relief packages and a clear economic plan”.

“There can be little doubt that recessionary effects are dragging the Scottish economy away from recovery and growth,” he said.

“The survey results paint a particularly worrying picture for the retail and tourism sectors with contractions in future sales and investment intentions.

He said as relief packages come to an end, such as the UK Government’s Energy Bill Relief Scheme, which ends in March, businesses are “extremely concerned, particularly on energy prices which continue to be volatile”.

The report, however, showed firms’ energy bills have halved since the previous quarter because of the relief scheme, which took effect from October 2022. It means, however, that labour costs have now taken precedence as the leading cost pressure, cited by more seven in 10 firms (72%).

Leckie said this includes “persistent challenges” over access to labour and retaining talent for firms”.

While the survey showed the UK Government’s energy bills relief scheme helped businesses, Leckie claims the subsequent “the lack of further support is a major cause for concern”.

“The successor to the energy bills relief scheme from March will see an 85% drop in the financial envelope of support which will fall short for thousands of Scottish businesses who are seriously struggling,” he said.

“While we welcome the 12-month duration of this package, the value is nowhere near enough and that means for some firms, energy will now be a cost too far. We would urge the UK Government to revisit the relief package urgently.”

On a sectoral basis, every sector reported a fall in confidence with retail and tourism seeing the largest fall when compared to the previous quarter.

A UK Government spokesperson said: “This Government will always be on the side of business. This is why we are providing them and other non-domestic energy users with an unprecedented £18 billion package of support this winter.