From a North-east point of view, the third quarter of 2023 could barely have gone any better.
Fresh from securing Investment Zone status – worth over £80million to this region alone – we have seen a number of positive economic interventions which will help shape our future economy.
Prime minister Rishi Sunak has backed future oil and gas development in the North Sea and also announced two further carbon capture and storage projects would go ahead as part of the drive for net zero.
The UK Government has now committed to providing up to £20billion of funding for early deployment of carbon capture, utilisation and storage (CCUS), with the Acorn project in our region now receiving support.
And in September we had confirmation that the Rosebank oil and gas field will go ahead, resulting in over £6billion being spent in the local supply chain, much of which resides in Aberdeen and Aberdeenshire.
This positivity is reflected in the sales and turnover data contained within this report, which is perhaps a reflection of a busy local energy sector.
However, we are hearing the same comments from a large number of our 1,200+ members across the region – turnover up, costs up, profitability squeezed.
Across the wider economy, national economic factors – all of which are almost entirely out of our control – continue to hinder our economic performance, as this report demonstrates.
Inflation and interest rates are complex economic forces that can have a corrosive impact on business profitability.
When costs rise faster than a business can adjust its prices, margins get thinner – and I think this is what this dataset is telling us.
While inflation may be starting to ease, it is still having a corrosive presence in the day-to-day operation of businesses in the North-east of Scotland.
This continues to be the biggest concern for businesses in the North-east, with 71% of those polled listing it as a concern, six percentage points higher the then UK average (65%).
Many now face tough decisions, such as whether to absorb the increased costs or pass them on to consumers through higher prices.
Our research suggests the latter, with 46% of companies in the region saying they plan to push up prices in the period ahead.
We will watch with interest to see if this is a trend which continues into the next quarter, or whether the signs that both the labour market and other costs are easing will be enough to reverse it.
Thank you to those businesses that took the time to complete the survey, it provides a strong evidence base to support our lobbying of all three tiers of government on behalf of our members and the region.