New figures released by the Institute of Directors (IoD) Scotland reveal that 82% of Scottish business leaders are concerned about the increasing tax divergence between Scotland and the rest of the UK. The annual IoD ‘State of the Nation Directors Survey’ highlighted the impact of introducing a sixth tax bracket in Scotland, with 45% tax on earnings over £75,000 annually, compared to the UK’s three tax bands.
Of those expressing concern, nearly 40% noted potential impacts on staff recruitment, 34% cited worries about employee location preferences, and 27% highlighted concerns about inward investment. While 61% of respondents reported having the right number of skilled people for current jobs, only 54% were confident about recruiting sufficient skilled staff in the next 12 months.
Catherine McWilliam, Nations Director – Scotland at the IoD, emphasised the ongoing challenge of the skills gap and its implications for future recruitment and staff retention. She noted that the new tax band in Scotland is perceived as an additional barrier to attracting and retaining talent, hindering investment.
Despite these concerns, the survey also revealed positive intentions for business growth, with 69% of respondents planning to expand in the next 12 months. Employment and cybersecurity were identified as key priorities for the next five years, with a strong appetite for integrating AI tools into businesses, as indicated by 80% of respondents feeling optimistic about AI opportunities.
Regarding the Scottish Government’s economic policy, 76% of respondents felt insufficient attention has been brought to long-term economic growth, and 50% expressed the need for more support to achieve the country’s Net Zero ambitions.
McWilliam stressed the importance of addressing fundamental challenges, such as access to skilled workers and effective policy implementation, to enable businesses to focus on broader societal goals. Collaboration between business leaders and decision-makers is crucial for creating a thriving economy that attracts talent and investment.
The 2024 State of the Nation Directors Survey received 180 responses from IoD members in Scotland, indicating a comprehensive snapshot of the current business landscape and priorities.
