Asked about their future ambitions, three in five (59%) respondents in the Henderson Loggie Scottish Business Survey have plans to grow their businesses in the year ahead, and 37% aim to strengthen their existing levels of activity.

The survey was carried out in association with the Research Chamber, the research team at Aberdeen & Grampian Chamber of Commerce. Scottish business activity is on a par with Northern Ireland and Wales, lagging three points behind the UK average. Reducing business rates is seen as the top action for both governments to support business growth.

As they work to control costs there is evidence that businesses are prepared to invest in the wellbeing of employees. Two thirds (65%) of owners and managers interviewed said staff recruitment and retention is a key priority over the next two years, and over half (51%) of all respondents are prioritising employee wellbeing and staff development.

The vast majority (78%) of Scottish businesses now see mental health as a joint responsibility between employer and employee, and 12% see it as the sole responsibility of the employer.

The number of people working from home has increased by seven percentage points to 29% compared to pre pandemic levels. The majority of those taking part in the survey (57%) do not intend to use increased homeworking as a permanent business model going forward, either because it’s not suitable for their business (72%), or because there is a perception that problems will occur from a negative impact on working culture or reduced communication (28%).

Of the one in three who responded positively to home working, 71% cite improved staff wellbeing as the reason, 65% perceive a recruitment advantage in offering flexible working and less than half (47%) gave increased productivity as reason for adopting the practice.

While employee conditions may be improving, plans to transition to Net Zero are set to advance more slowly, and are a focus for just 18% of businesses surveyed. Innovation and R&D are at the bottom of the table with only 10% of respondents listing it as a key priority in the short term.

Jaslin Bhagrath, Henderson Loggie partner and head of accounting and business solutions, said: “It is a tough environment, but overall, our business barometer points to a sense of fortitude in the business mood as managers continue to deal with the fallout of Brexit, the pandemic and the ongoing impact of the war in Ukraine.

“Yet, while grappling with issues around cost control, concerns for employee wellbeing are front of mind right now as they prioritise attracting, training and retaining the people needed for their businesses to prosper in the short term.’

“It may raise questions around long term strategy as this focus on staffing issues ranks ahead of improvements in sales and marketing which is of importance to only 31% of respondents, and investment in innovation and R&D which is a priority for just 10% of businesses in Scotland today.”