As Rachel Reeves prepares to deliver her second budget speech at the Westminster dispatch box, Scottish firms have been discussing the impact of last year’s statement and sharing their views on what could make or break this week’s announcements.
More than 100 businesses were represented at Hampden Park for the Scottish Growth Seminar, with business leaders, guests and entrepreneurs addressing an audience of 175 delegates.
A recurring complaint emerging in conversations with chief executives and founders was last year’s hike to employer National Insurance contributions, which many held responsible for the difficulty they faced hiring additional staff.
Peter Barclay explained businesses are “feeling a bit bruised” from last year’s budget, particularly from the added taxation.
He said: “The extra taxation and National Insurance has made them really worried about employing staff, taking on staff and especially underpinned by Brexit and the skills shortage.
“Businesses are there to grow, they just can’t.”
Rachel Wallace, Operations Manager at IT Service provider BC Technologies, echoed his sentiment with first-hand experience.
She admits the impact of rising employer contributions was “massive”.
Peter Barclay explained businesses are ‘feeling a bit bruised’ from last year’s Budget
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“It’s really stopped us taking on another trainee,” she said, “because it costs us now the difference of another salary.”
She hopes her namesake will consider “what they’re doing and the impact it will have” when the Chancellor delivers her budget this week: “We’re a company of 24 and how is that going to affect us?”
Walking and talking through the throng of 100 Scottish businesses swimming against the financial tides, some SME executives are looking for the government to by more transparent and show businesses they understand how challenging the current economic landscape is for growth.
Paul Kingham, Managing Director at his family business consultancy Kingsmith, suggested: “the government needs to lay an environment that is giving people confidence that the economy is actually growing.”
Rachel Wallace told this broadcaster the impact of rising employer contributions was ‘massive’
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He believes most people are reluctant to spend and invest, “because they don’t know if they’re going to get that back and they’re not sure how the economy is going.”
He suggests Rachel Reeves needs a reminder that small and medium businesses need help to grow too, not just large multinationals.
Another appeal for the Chancellor to provide more opportunities to invest came from Mighty Atoms founder, Karen Trickett.
Since 2011, Karen has connected business owners with marketing experts to accelerate their businesses online at a fraction of the cost of direct sourcing.
Karen Trickett said she’d like to see the Chancellor give the ‘opportunity to genuinely be able to invest’
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Looking ahead to this year’s statement, she says she’d like to see the Chancellor give the opportunity to genuinely be able to invest.”
She continued, “Whether that’s sales and marketing, whether it’s upscaling their teams or whether it’s making acquisitions.
“Particularly in the last budget, business took a fairly big hit.”
Other proposals to help companies grow include raising the VAT threshold.
Nicola Paul founded Yellow Bird Digital to work with businesses to enhance their e-commerce potential.
She said: “For me as a limited company, I’d really like to see the VAT threshold rise.”
Nicola Paul said she’d ‘really like to see the VAT threshold rise’
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Today, businesses earning more than £90,000 taxable turnover trigger the VAT threshold, while VAT accounting schemes don’t begin until £150,000.
Nicola explained, “I work with a range of SMEs, small businesses right through to larger businesses and I think having to charge VAT when you’re working freelance can be quite difficult.”
Though much of the Chancellor’s statement will not directly impact Scotland and instead feed recalculated Barnett Consequentials for the devolution settlement, Scottish businesses will still be taking note of a significant portion of the announcements when the red briefcase comes out.
After the election promise of change, few thought they’d be met with a debilitating series of financial hurdles, particularly dampening the mood of the SME sector.
With hope for a renewed opportunity to grow in 2026/27, the old adage “prepare for the worst and hope for the best” succinctly sums up the feelings of a large part of Scotland’s business sector.