By Keith Anderson

Businesses are well used to facing – and weathering – storms.

But soaring business and living costs and instability from the war in Ukraine has meant firms have had little respite from two years of pandemic-dominated disruption. Add historic challenges with low productivity and access to skills to the mix and it is difficult not to be concerned about Scotland’s future prospects.

One of the most acute problems is one I know all about – energy costs. Firms and customers are deeply worried about their energy bills and the wider cost-of-living crisis, with many never having experienced affordability issues like this before. Make no bones about it, the size and scale of the problem is beyond what any one industry, or even government, can handle.

That is why we need government and business pulling in the same direction. The cooperation and agility that steered us through the pandemic needs to be brought to bear on these new circumstances. Determining the problem is easy, delivering workable solutions is the difficult next step.

That is why my business put forward one option to ease the immediate crisis for those most in need: a targeted fund to take £1,000 off their bills, which could be recouped over a longer period when prices return to a more normal level. That, coupled with the introduction of a longer-term social tariff – to replace the current price cap – could really help to protect those most at risk. Others will have their own proposals, but it is clear we need to think outside the box if we are to properly support those facing fuel poverty.

The situation for businesses is tough also. For those facing the full weight of energy price rises now – including energy intensive industries – it is a handbrake on investment. At worst, it could even be an existential threat.

There is also a fear among some firms on longer-term contacts that pain is just being prolonged. Fortunately, most firms are resilient, but cashflow remains a problem.

That is why the CBI is talking to government about ways to bridge those near-term cashflow concerns.

Beyond remedial action to help those hit hardest by current challenges, the long-term prospects for the economy should give everyone pause for thought. Cash-strapped households will make consumer-led growth hard to come by in the years ahead, putting even greater pressure on business investment to support growth.

Encouragingly, the firms I speak to do want to invest in innovation, people, and new markets. But the current environment is fostering a ‘wait and see’ approach. Scotland cannot afford for firms to sit on their hands if we want to grow our way out of this current predicament. In this sense, business needs help from government.

To be clear, this is not about handouts – the solution has zero cost to the Treasury. What businesses need is a hand-up in the form of clear signalling to boost confidence. For firms to feel sure that investments will not be wasted, they want to see government really focus on growth and opportunity. That means streamlining processes and cutting red-tape in areas like procurement, planning and recruitment.

Take green growth. ScottishPower has hung our hat on renewable energy, and it has been a huge success. Other companies want to follow that same green path. From electric vehicles to de-carbonised transport, energy efficiency to carbon capture and storage, the opportunities are clear. But we need to see evidence that government shares that view. Green growth is not just an aspiration anymore, it is a pragmatic plan for jobs and enterprise that a modern Scotland can be built on – particularly when we harness our great legacy in oil and gas.

When talking about the economy today, it is hard not to dwell on the negatives. We have real world problems that are impacting everyone – from small businesses to our biggest firms, from our employees to their friends and families.

To reach better times ahead we need to double-down on building a clean, green and prosperous economy that can deliver for all.

Keith Anderson is chair of CBI Scotland and chief executive of ScottishPower