Political and global uncertainties impact on investments in far north

Trudy Morris, chief executive of Caithness Chamber of Commerce, says getting the right advice can help businesses negotiate difficult times

The chamber network serves as a unified voice, representing the interests of its members worldwide. In Scotland, this network comprises 30 local chambers, advocating for 12,000 businesses and over half of the private sector workforce.

Engaging in proactive lobbying and policy initiatives at Holyrood and Westminster, the chamber network ensures that the concerns of Scottish businesses are heard on a national stage. Here in the north Highlands, Caithness Chamber plays a crucial role in amplifying the voices of our region’s businesses within this narrative.

A cornerstone of the UK’s economic analysis, the Scottish Chambers of Commerce’s Quarterly Economic Indicator survey painted a sobering picture at the outset of 2024. The report, covering quarter 1 of 2024, highlighted pervasive challenges across Scottish industries.

Significant cost pressures and recruitment issues are creating a tough operating environment, impacting companies across all sectors. High operating costs are affecting cash flow and profitability, with potential long-term implications for the economy.

Geopolitical tensions, both national and global, underscore the need for government action to ensure smooth trade. Economic uncertainty continues to dampen investment, with over half of firms reporting no expected changes in this current quarter.

There is discontentment among businesses with government tax policy, with concerns about the impact of income tax differences between Scotland and the rest of the UK, and its impact on the ability of businesses to attract and retain talent, something that’s particularly close to our hearts here in the north Highlands.

Locally, our members are reporting inflexibility from some banks and a struggle to maintain necessary liquidity for asset replacement, growth, and seizing new opportunities. This hampers growth and frustrates business owners striving to survive in turbulent conditions.

The challenges highlighted in the survey are a perfect storm impacting investment decisions – recruitment challenges, tax burdens, weak cashflow and declining profits.

Despite these challenges, Scottish businesses are showing resilience, with business confidence and recruitment plans holding steady. Locally we have seen this with an increased number of businesses recruiting apprentices.

With a change of leadership in Holyrood and a UK general election now called for early July, businesses face further uncertainty and change.

It’s important to remember that these obstacles are not new; inflation and political uncertainty have always been realities for businesses, and there are strategies to navigate them successfully.

Business resilience is never tested more than during challenging economic circumstances. Building a more resilient business, with more resilient processes, can be the difference between surviving and going under.

In times like these, finding the right advice is crucial. Seeking expert financial advice can help optimise tax strategies, manage debts, and ensure long-term stability.

In April, during our Members Insight Session, we welcomed Kevin Philip, director and financial advisor at Phil Anderson Financial Services, where following our motto of “stronger together” Kevin provided expert advice and knowledge sharing on financial planning for businesses with our members, including commercial lending, tax-efficient protection for business owners, retirement planning, tax advantages of salary sacrifices and investment planning.

Kevin also discussed the need for business protection against unforeseen events, such as illness, disability, or death of key personnel, and covered key person insurance, shareholder protection insurance, and business loan protection.

In times of uncertainty, solidarity and knowledge-sharing among our members become essential. We are pleased to be here as a chamber facilitating these connections and supporting businesses in our region.

Business Insight by Phil Anderson

In today’s rapidly changing financial landscape, the need for personalised and accessible financial advice has never been more crucial. At Phil Anderson Financial Services, we are committed to providing the local business community with the financial guidance and advice they need to navigate these challenging times.

One of the significant advantages of having a local financial adviser is the ability to meet in person. This face-to-face interaction fosters a deeper understanding of our clients’ financial situations and goals.

It allows us to build trust and offer bespoke solutions that might be overlooked in more impersonal settings. In an era where several banks have closed local branches, having access to local advisers becomes invaluable.

We are trying to fill the gap left by these closures, ensuring that the people of Caithness continue to receive the financial planning they deserve. Our office in Wick is home to two exceptional advisers: Kayleigh Ross, our financial adviser, and Louise Cormack, our mortgage adviser.

We offer comprehensive financial planning, including tax planning, investment advice, retirement planning, and protection advice which is often seen as the cornerstone of financial planning. Tax planning, in particular, is an area where many businesses can benefit significantly.

By working with a financial adviser, you can ensure that you are making the most of available tax allowances and reliefs, ultimately enhancing your financial position. Businesses can take advantage of capital allowances on equipment and machinery, claim research and development (R&D) tax credits, and ensure that they are utilising annual investment allowances.

Tax-efficient structuring of a business, such as choosing the right business entity (sole trader, partnership, or limited company), can also significantly impact the amount of tax payable. Properly planning for VAT, managing payroll taxes efficiently, and taking advantage of any available local business grants or incentives can also significantly enhance a business’s financial health.

Businesses in the north Highland region should also be aware of specific nuances that could impact their tax planning and financial strategies. The region’s unique economic drivers, including renewable energy projects, tourism, and agriculture each come with its own set of financial opportunities and challenges. Understanding these local characteristics allows us to provide tailored advice that maximises the financial benefits.

By working closely with a local financial adviser who understands the regional landscape, businesses can navigate these complexities more effectively and position themselves for long-term success. Our goal is to make financial advice accessible to all, providing clarity and confidence in making informed financial decisions.

• Phil Anderson is the managing director of Phil Anderson Financial Services Ltd.

Do you want to respond to this article? If so, click here to submit your thoughts and they may be published in print.