Finance directors in Scotland are predicting a slow-down in economic growth over the next 12 months.
Of the 100 financial directors, chief financial and senior finance officers polled in ICAS’ (Institute of Chartered Accountants of Scotland) The CA magazine survey, 51% said that growth would be flat or negligible.
Only 42% said they expect to see strong or modest growth, compared with 82% last year.
This is in contrast with the UK-wide picture, in which 58% of financial professionals expect strong or modest growth.
The survey, which was carried out in partnership with law firm DLA Piper, revealed that oil price is only seen as the most critical barrier to growth among a small minority of financial directors.
Skills shortages were cited as the biggest barrier to growth across the board.
The top three issues for financial directors were:
Staff recruitment and retention
Weak confidence, among consumers and in the business sector, along with red tape and regulation, the slowdown in Chinese growth and uncertainty over the UK’s future in the EU were also mentioned.
According to the study, the majority of financial directors believe the key to boosting economic productivity over the next 12 months lies with businesses themselves rather than the government.
Better employee motivation, improved business processes and greater investment in training were cited as the top three measures which would help improve economic productivity.
The research suggests that the risk of redundancy looms large for businesses. More than one in four (28%) anticipate redundancies in their organisations during the remainder of 2015. Just 19% expected redundancies when asked this time last year.
Controlling costs, growing revenues and staff recruitment and retention were, once again, highlighted as the top three priorities facing financial directors.
However, the more prominent role of IT across business operations has seen cyber security and other IT issues move further up their list of priorities into the top 10.
External pressures remain largely unchanged in 2015 compared with last year. Ninety-one % of financial directors have not experienced reduced availability of bank finance in 2015 (89% in 2014). Bad debts are slightly more prevalent, with 34% noticing a rise in bad or doubtful debt compared with 27% last year. Also, 24% were experiencing “significant” downward pressure on prices (2014: 8%).
Simon Rae, office managing partner of DLA Piper in Scotland, said: “The economy will have plenty to contend with over the coming year including the impending EU referendum, the prospect of a rise in interest rates and the expectation that oil prices will continue to stay depressed. However, as in previous years, if the views of our financial directors provide an insight into what we can expect, with a degree of caution we should still be looking for modest growth.”
ICAS CEO Anton Colella said: “The new number one at the top of Britain’s risk registers is the difficulty of recruiting the right staff with the right skills to grow our economy. The skills gap is not just a problem in construction, manufacturing and technology but a red flag across almost every sector in the UK. If we are to ensure sustained growth in the UK economy then this must be addressed and it requires a concerted effort by business, government, education, and the workforce.”