The Scottish Chambers of Commerce’s survey flagged taxation concerns among 55% of businesses – up from 35% last year. Anxiety, particularly around Labour’s Autumn Budget, saw both the tourism and retail sectors reach five-year survey highs of 77% and 70% for taxation respectively.

 The survey of hundreds of Scottish businesses, carried out in partnership with the Fraser of Allander Institute, also shows that pressures on cashflow and profit margins are limiting and squeezing growth.

 Four out of the five business sectors surveyed reported a fall in profits, with only the services sector showing an increase but still significantly down on the same quarter last year.

 Douglas Smith, Vice-President of the Scottish Chambers of Commerce said: “General business confidence is uncertain given recent government rhetoric on how painful this budget will be and taxation is a significant concern.

 “How this will impact business and employees is a huge worry and the lack of clarity has stalled investment and undermined confidence.

“In addition, employees worry about personal taxation with fuel duty, pension tax relief and the impact of fiscal drag all taking cash from their pockets. That will lead to increased wage demands as 7 in 10 firms now cite labour costs as their top cost pressure.

 Mr Smith added: “Businesses understand that the fiscal backdrop for the Chancellor is challenging. We are willing to work in partnership to overcome these challenges and help grow the economy. However, any changes made must not be at the expense of investment and growth.”

 The report also warned that cashflow remains a considerable challenge for firms with three out of five sectors seeing a contraction with only services and tourism reporting growth on balance.

 Mr Smith added: “The widespread cashflow issues which are impacting most sectors are concerning.

 “Many are about to come out of longer-term energy deals and are looking at hefty increases, with some gas bills alone set to rise 50% this month.

 “We will also be looking for help in the forthcoming Scottish Budget to address costs, particularly in business rates which remains a major pressure on almost two thirds of retail firms surveyed.

 “Businesses, particularly in the leisure, hospitality and tourism sectors simply cannot endure any further tax burdens.”

 The report also highlighted continuing issues on recruitment with difficulties being experienced by half of businesses.

 Dr Liz Cameron CBE, Chief Executive of the SCC, said: “We are now 100 days into the new UK government, and we have still not had positive action on the many issues we face.

 “One of those is employment and businesses are still being held back by the inability to recruit experienced and skilled staff and the expense of securing and retaining them in a highly competitive, under supplied marketplace.

 “We need the Chancellor to help ease that pressure by unlocking targeted investment in training with skills aligned to business demand and a clear international workforce strategy to help fill skill gaps.”

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