Scottish Government Struggles To Win Over Business Community

27th October 2024

Just 9% of Scottish firms agree that the Scottish Government understands the business environment in Scotland, compared to 64% of businesses that disagree for the second year in a row.

This is according to the latest Scottish Business Monitor, a survey of over 350 firms conducted in August and September, produced by the Fraser of Allander Institute at the University of Strathclyde.

The Institute asked firms about their relationship with the Scottish Government as part of an annual assessment following the ‘New Deal for Business' launch in April 2023, comparing the findings to last year's report.

The report finds that just 6% of businesses agreed that the Scottish Government engages effectively with their sector, down from 8% in 2023, meanwhile, 68% of firms disagreed.

A slightly better 19% of firms believe they can influence Government policy if new announcements affect their business. However, 46% disagree with the statement, up from 39% last year, reflecting a growing frustration among businesses regarding their ability to have a say in policymaking.

The latest analysis also finds differences across sectors, with construction and finance firms expressing the highest levels of dissatisfaction. In contrast, businesses in the professional, scientific, and technical activities sectors were slightly more positive, although overall confidence remains low across the board.

The results suggest that the Government's ‘New Deal for Business' initiative has done little to turn the tide with the business community. Instead, the findings indicate that this relationship has either stagnated or deteriorated further.

João Sousa, Deputy Director of the Institute, said: "These results will undoubtedly be disappointing for the Scottish Government, particularly given that it's been well over a year since the launch of the New Deal for Business.

"While no one expected a dramatic reconciliation in only a year, the Government would have hoped for at least some signs of progress. But that is not what we found. And while businesses have undoubtedly faced broader challenges from economic instability over the past 15 years, some specific high-profile policies and political turmoil closer to home have only strained this relationship further.

"Of course, there is a shared responsibility here. Business representatives and firms, both locally and nationally, need to actively engage in this reset. Real improvement in the relationship between Government and the business community can only come through meaningful collaboration — and these results should serve as a clear mandate for making that happen."

These findings come on the heels of the latest Scottish Business Monitor, which found that many firms are in a ‘wait-and-see' mode, as they look to the upcoming budgets for clarity on the economic direction of both Scotland, and the UK.

Strathclyde University’s Fraser of Allander Institute introduced these questions last year to allow the Scottish Government and the business community in Scotland to understand how the relationship between the sectors is changing as the "New Deal for Business" is implemented.

These questions will continue to be monitored annually to report on progress.

Authors
João Sousa
João is Deputy Director and Senior Knowledge Exchange Fellow at the Fraser of Allander Institute. Previously, he was a Senior Fiscal Analyst at the Office for Budget Responsibility, where he led on analysis of long-term sustainability of the UK's public finances and on the effect of economic developments and fiscal policy on the UK's medium-term outlook.

Brodie Gillan
Brodie is a Knowledge Exchange Assistant at the Fraser of Allander Institute. She has recently completed an MSc in Applied Economics at the University of Strathclyde and has a first-class Honour’s degree in Economics and Politics from the University of Glasgow

Read the full report HERE
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