Rural Scotland Business Panel Survey February 2023

9. Conclusion

Rural businesses were operating against perhaps the most challenging economic circumstances since this survey began in October 2021. Fieldwork took place in the context of a cost of living crisis, record inflation, and the beginnings of a recession. The cost crisis therefore featured as a central theme in this wave of the survey and it was clear that it was having significant impacts on rural businesses.

Some of the key findings that the survey highlighted this wave were:

1. Confidence in the economy was down and at the lowest level recorded since the survey began in October 2021. Reflecting the turbulent economic environment, levels of confidence halved over the past 12 months, while only around a third saying they were confident in the economic outlook for Scotland.

2. While most businesses felt confident in their future viability, there was also a sense of uncertainty about the future. Among those that were not confident, around half felt uncertain about what the next six months had in store, while the remainder either expected to be operating at loss, downsizing or ceasing operating completely. Even among the more confident businesses, a quarter felt it was too soon to say how they would be performing in six months’ time.

3. Reflecting the sense of uncertainty, businesses were planning more in the short term than longer term. Most were planning no more than six months ahead, with a quarter unable to plan beyond the next month. Those that had struggled in the last six months felt unable to plan far ahead, while those that had performed well were able to plan longer term.

4. Increased costs were being widely felt and were impacting on profit margins and ability to grow and make plans. Electricity and gas, raw materials and transportation of goods were the biggest cost increases and those that were having the biggest impact. Impacts of cost increases were being felt particularly strongly by the tourism and food and drink sectors.

5. Ability to respond to the cost crisis varied by level of performance. Those that had performed well were more likely to be increasing prices or investing in the business. Those that had struggled, on the other, appeared to be scaling back or using their cash reserves – actions that suggest a shorter term response to the crisis.

6. Negative impacts on wellbeing were also apparent. Businesses reported feelings of worry and stress, working longer hours, reductions in pay and difficulties balancing work and home life. Employers also reported impacts on their staff, such as working at or beyond capacity, low morale and requests for additional support.