Rural Scotland Business Panel survey: report

10. Conclusion

This first wave of the Rural Scotland Business Panel survey was carried out at a time when businesses were grappling with a range of economic challenges. In addition to the ongoing recovery from COVID-19, businesses were operating against a backdrop of increased inflation, record fuel prices, widespread reports of fuel shortages and disruption to the wider supply chain.

Against this background, the survey highlighted some key findings in relation to the attitudes, behaviours and priorities for rural businesses at this time:

1. Despite challenging economic circumstances, rural businesses were generally confident in the economy and were optimistic about their future prospects. Most businesses were operating at, or above, the level they were before COVID-19, suggesting signs of recovery from the pandemic. However, around two fifths were operating below their pre-pandemic levels. Around a third were striving for growth, while half were content with their current level of performance.

2. Most businesses had experienced increased costs in the last 12 months and this was their top concern. Responses to increased costs varied, but businesses were more likely to have absorbed those costs than passed them on to customers through price increases.

3. Supply chain issues were common, with most facing problems accessing the goods, materials, or supply of services they needed. These supply chain issues had contributed to increased costs and a range of other impacts.

4. Half of businesses were experiencing labour shortages, either as a result of recruitment or retention challenges or from staff absence. These shortages had caused a range of impacts such as increased workload for other staff, difficulties delivering their services, and scaling back their offer.

5. Moving to net zero was seen as important, but in the short term the top priorities were keeping pace with new technology and innovation. Most businesses were taking action to reduce their greenhouse gas emissions. The most common actions businesses were taking or planning to take were those that arguably might require the least significant changes, such as recycling and minimising waste.

These, and the other findings outlined in this report, highlight areas that may be of interest to explore in future waves of the survey, including:

• The extent to which business confidence, performance and outlook change over time. These aspects have been regularly tracked in the HIE and SOSE business panel surveys and there is value in continuing that trend for future waves covering the whole of rural Scotland.
• If cost increases continue to be an issue for business, particularly in the context of economic challenges such as inflation, fuel prices, and cost of labour. The impact of these cost increases and the way businesses respond would also be useful to continue to capture.
• The ways in which businesses trade with Scottish and international markets, whether they experience supply chain challenges and what the nature of those challenges are. What impact will changes to import arrangements have on businesses that source goods or services from outside the UK?
• To what extent will labour shortages continue and what other workforce-related issues will businesses face as they recover from the pandemic and find new ways of working. There would also be value in further exploration of the reasons driving labour shortages, the impact of these on businesses and the actions taken as result.
• On net zero, how businesses prioritise net zero adaptation in the short, medium and long term. Future waves could also explore reasons why businesses are inhibited in engaging in net zero opportunities.