April 22, 2025
Full articleResilience is key amidst wider economic uncertainty
Gilson Gray was delighted to recently renew our commitment as co-sponsor of the North East Quarterly Economic Survey.
Issued by Aberdeen & Grampian Chamber of Commerce, the report provides a worthy barometer of business and economic perspectives in the North East of Scotland and beyond and we are delighted to support the work of the Chamber in collating and reporting on this key dataset.
Unsurprisingly, the Q1 report is dominated by taxes and their implications for North East businesses. And the numbers are sobering as 83% of north east businesses report taxation as their primary concern. The continuing application of the Energy Profits Levy to O&G operators (despite an oil price around $60-70 per barrel) is clearly having a significant effect on industry confidence which is cascading across the region. The NIC changes announced in the autumn budget are also weighing on the minds of business leaders with businesses expecting restrictions to wage increases and plans for price hikes, headcount reductions and wider cost-cutting. And almost every respondent (96%) agreed that the business rates system in Scotland needs urgent and fundamental reform.
We are seeing the real-time consequences of Labour’s tax-heavy budget. For the last two quarters only 16% of North East firms have seen increased UK sales – the lowest level since Q1 2021. Unfortunately, the number is even lower for overseas orders – at 12%. The North East has been an export powerhouse for many years and this has distinguished it from the UK for some time. So it is concerning to see these numbers moving in the wrong direction.
It is clear that North East businesses are expecting a challenging year ahead – whilst 39% of businesses expect turnover to increase over the next 12 months, that is significantly down from 57% at the same point last year and 62% the previous year. Given these responses pre-date the commencement of Trump’s global tariff re-alignment, we might expect more of the same trajectory next quarter.
The broader impacts of this economic upheaval will likely play out in various ways:
- We will likely see expansion plans put on ice and a reduction in capex and technology investment.
- Boardrooms will be concerned by the effect on their own trading and margins, but also the stability of supply chains and demand levels within the economy.
All of this puts real emphasis on the importance of getting the basics right to ensure resilience through 2025 with priorities including cash management, performance improvement and lender engagement.
The UK Government is focused on growth as a number one priority. Given the recent data, our Governments have a lot to do if they are to restore business confidence and incentivise investment and growth. Whatever happens with a US-UK trade deal, an EU-UK free-trade agreement must be an urgent priority to incentivise international trade. Urgent and significant planning and regulatory reform should also be at the top of the list to encourage infrastructure investment across the domestic supply chain. And significant global economic uncertainty may be a good time to roll-back one or two of those tax changes which are so heavily impacting business confidence in the short to medium term.
For more information please contact:
Findlay Anderson
Partner, Corporate Law
E: fanderson@gilsongray.co.uk
T: 01224 011 692
