BUSINESS leaders in Scotland have said the next Westminster government must cut the cost burden on firms amid growing concern about the outlook for the economy.

While the new administration will have to deal with Brexit, ministers must maintain a focus on the domestic agenda and take decisive steps to help the firms that are the engines of growth.

The call for action comes as businesses find their efforts to deal with challenging trading conditions hampered by cost increases in areas ranging from business rates to employees’ pensions.

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“With Scottish businesses facing the prospect of rising inflation and weak consumer demand, the threats to our economic growth, which lags behind that of the UK as a whole, are readily apparent,” said Liz Cameron, chief executive of Scottish Chambers of Commerce.

She thinks the Government could make a big difference by encouraging businesses to invest in new opportunities and jobs.

Noting the impact of recent legislation on pensions, the National Living Wage and the Apprenticeship Levy, Ms Cameron said the Government needed to reduce the fixed costs businesses face to compensate.

“That is why we believe that the UK Government must target reductions in business rates, rather than Corporation Tax, in order to produce the biggest boost to the largest number of businesses,” she said.

“Whilst this is a tax that is devolved to Scotland, clear strategic action on business rates in England would assist the Scottish Government in delivering long overdue restructuring of this tax north of the border.”

Scottish Chambers of Commerce also suggested a temporary cut in the Value Added Tax rate could help tackle rising costs while boosting consumer demand, which has been the major driver of growth in the Scottish economy.

It wants the VAT rate on the key tourism and hospitality sector reduced to five per cent permanently, to take it into line with the vast majority of European countries.

The Federation of Small Businesses said a survey found action to tackle high business costs was a key priority for more than half (56 per cent) of its Scottish members.

Fifty three per cent of respondents said delivering a good Brexit deal for small businesses was one of their priorities.

Some 44 per cent wanted action to tackle the problems the self-employed face accessing social security support and pensions.

Noting that hundreds of thousands of Scots are self-employed or run a small business, the FSB’s policy convenor in Scotland, Andy Willox, said: “These hardest of hardworking voters are looking for the next UK Government to keep on top of the domestic agenda, as well as deliver a Brexit deal which works for every locality and sector.”

In its election manifesto the FSB said the Government must protect the self-employed from being singled out for tax grabs, such as higher National Insurance, freeze Fuel Duty and Insurance Premium Tax and introduce measures to curb the bullying of small suppliers by big businesses.