Despite depressing economic forecasts, Scottish mid-market business leaders are surprisingly optimistic about their growth opportunities.
According to data from Grant Thornton UK’s latest Business Outlook Tracker, optimism has rebounded across all indicators monitored.
Economic optimism has risen 12% since October, while revenue growth expectations are up by 40% and profit growth expectations also increased by 28% since then.
Optimism regarding their funding position was up 40% since October and more than half (54%) of those surveyed were also confident that they have sufficient working capital to manage the impact of a recession for six months or more.
The bi-monthly survey was conducted by Censuswide among 50 senior decision-makers in Scottish mid-market businesses at the start of December. Grant Thornton defines mid-market as companies with an annual turnover between £50m and £500m.
This sector, however, continues to struggle to attract and retain talent, with 48% of respondents experiencing unusually high attrition rates - and 50% are also struggling to recruit for open roles.
More than three quarters of respondents (78%) are planning to offer staff a pay rise in line with, or above, inflation, while 82% are also reviewing their employee benefits package to make it more competitive.
Just under a third (28%) are also planning to invest more in skills development over the next six months.
The research also found that the mid-market is starting to look for ways to reduce its reliance on people. Almost three quarters (74%) are increasing their use of automation and digital technologies.
Stuart Preston, partner at Grant Thornton, said: “It is surprising that the levels of positivity in the mid-market are at odds with the current forecasts from the Bank of England and the government.
“We assumed that a likely recession would lead to a more fluid labour market and we still expect unemployment to increase in 2023 and 2024 to more normal levels.
“Anecdotally, we are already starting to see signs of this, with more employers asking their people to come into the office more frequently.
“But with the UK in the midst of numerous strikes around pay and working conditions, how far these demands are met could have a knock-on effect for the mid-market and place further salary growth pressures on employers,“ he continued.
“That said, having seen first-hand how Scotland was able to respond to the challenges of recent years, with resilience, determination , flexibility, enterprise and innovation, there is a high probability that many businesses in our region will find a way to survive and thrive during the months ahead and this optimism will likely increase as we progress through 2023.”
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