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We're at a point where the broader macroeconomic environment is looking more certain, so there's a bit of cautious optimism among businesses in Scotland. They appear to have more liquidity compared to pre-pandemic and should be well placed to focus on growth, but fast and efficient access to finance is still key.
Head of Corporate Banking, Scotland
With current projections for, inflation and interest rates showing they are likely to settle down somewhat, I think businesses across Scotland are beginning to feel more cautiously optimistic – suggesting that many could focus more on investment and growth in 2025.
That said, my conversations with clients paint a picture of varying confidence across different industries, with digital and technology, renewables, and healthcare probably being the most optimistic. Green technology and life sciences seem to be generating strong levels of investment, most likely due to government making the right noises. In addition, in my view, hospitality and leisure continues to be a strong sector for Scotland, which I put down to its global appeal in terms of affordability and safety.
However, high borrowing rates, residual uncertainty, and the labour and skills gaps are still dampening confidence to some extent. Hopefully a continued reduction in inflation, interest rates and costs will ease cash flow pressures and allow more businesses to invest. Businesses need to be confident that the environment is right for investment and that finance is available – and we’re committed to supporting that. For example, we have £22bn in lending available for UK businesses through the Business Prosperity Fund.
If you’re looking to unlock growth opportunities to move your business forward, our £22bn Business Prosperity Fund is available through some of our borrowing and refinancing options. See how we could work together to achieve your ambitions and strengthen the UK economy. Subject to normal lending assessment, status and application. Terms and conditions apply.
I’m hearing lots of talk from businesses about the need to focus on improving productivity. There appears to be considerable regional disparity across Scotland in terms of productivity, with skills gaps and lack of digital infrastructure and connectivity acting as barriers in some areas.
I’m sure the life sciences, biotechnology and pharmaceutical sectors will continue to demonstrate fantastic levels of research and development and innovation, supported by a strong university system and strong university-business connections – and hope to see this extended to other sectors.
It’s generally understood that there is a need to enhance digital skills and education across Scotland, particularly given the growing importance to businesses of AI. Although universities and higher education authorities have their role to play in shaping the workforce of the future, businesses may also want to focus their attention on mid-career upskilling over the coming year.
In addition, I believe we could all do more to encourage private sector investment into Scotland during 2025. While we’re seeing increased investment into certain areas, such as tech and green energy, more could be done to attract direct foreign investment. Regional economic development incentives and better transport connectivity could go a long way to supporting increased productivity.
Equipping our workforce with the right skills for the future is key to increasing productivity and the government, educational institutions and businesses all have a part to play in this.
Head of Corporate Banking, Scotland
Scotland has an abundance of resources that could support its role in the journey to net zero, including a skilled workforce, the experience of our offshore industries, some cutting-edge technologies, and a natural environment that lends itself to renewable energy.
For example, the announcement that Aberdeen will be home to Great British Energy is testament to the strength of our engineering and renewable energy skills and expertise. This publicly owned clean energy company aims to scale up clean homegrown power, promote energy independence, and support job creation and economic growth. With further sites planned for Edinburgh and Glasgow, it is expected that Scotland will have a strong voice in shaping the national energy strategy, boosting the renewable sector, and driving the net zero agenda.1
While this is positive news for the country and Scottish businesses, there are other considerations. For example, upgrading the National Grid and wider infrastructure could help maximise Scotland’s capability to use its renewable power sources.
The pandemic required many businesses to focus inward to protect margins, keep costs under control, and keep customers happy. Now that more businesses are well capitalised and the inflation rates have stabilised, they may want to adopt a more outward-looking focus. Investing in people, technology and different markets and products could help fuel growth.
Cybercrime and fraud continue to be on the rise, resulting in potentially devastating consequences. Investing in the necessary safeguarding systems, appropriate insurance, and staff awareness and training should be a priority for businesses of all sizes.
Businesses are all at different stages on their sustainability journeys – if they have started at all – and working towards net zero commitments at different paces. It’s important that they not only have a clear strategy, but also understand the individual journeys of businesses in their supply chains. Businesses would do well to use the vast range of financial, practical and informational support available to them.
Keeping fraud front of mind
Fraudsters are as active as ever across Scotland, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
To discuss your business requirements and how Barclays can support you, contact us today.
