First Minister Humza Yousaf is expected to unveil his “programme for government” for the coming year to Parliament tomorrow.

Our new First Minister has certainly had a full in-tray since he took office in the spring. The speech presents an opportunity for him to put his own personal stamp on the governing philosophy of the administration. A key watchout will be how he seeks to balance calls for further government intervention on social policy and environmental matters with the impact on the economy.

As such, Mr Yousaf’s remarks will be keenly watched by business. He has taken office at a critical juncture for the economy after three years of fallout from the pandemic and the costs crunch. The economic landscape has shifted markedly and for retail at least consumer demand and shopper footfall remain flaccid. It is why Mr Yousaf’s governing agenda must make growing the economy the priority of priorities.

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Central to this should be a plan to bolster private sector growth, ease the regulatory burden, and support consumers and retail destinations, whilst building on positives such as the upcoming peak rail fares discount. After all, an expanding economy is good for living standards and job prospects and funds government’s social agenda.

When it comes to prioritising the economy the First Minister has got off to an encouraging start. He has shrewdly nixed initiatives such as in-store restrictions on alcohol marketing and the deposit return scheme (DRS). He has also delivered the “new deal for business”. This accord with commerce ought to result in a more coherent and less ad hoc approach to regulation founded on engagement with business at the inception of policy development. Had this approach been followed previously, it would have negated many of the pitfalls that ministers found themselves in over the past 12 months.

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Of course, the proof of the pudding will be in the eating. With the economy in a rut, what better time to display this new approach than with a legislative programme which contains few surprises for business and which gives firms some much-needed breathing space?

One practical suggestion would be for ministers to think twice or hit the pause button on another legacy policy, namely plans to examine making eligibility for business rates relief and licensing provisions contingent on payment of the “real” living wage. If there was a time to progress such a move then – given the weak economy - now isn’t it.

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Such conditionality has been applied to public procurement contracts and eligibility for taxpayer-funded grants. Until now it has affected relatively few firms. However, extending conditionality to licensing provisions and business rate reliefs is an entirely different order of magnitude.

A broad swathe of commercial activity in Scotland is subject to government or local authority mandated licensing permissions. In retail this can encompass the sale of alcohol, food, fireworks, knives, and tobacco. More broadly, it can include permissions to operate hospitality premises, boarding kennels, bookmakers, caravan sites, cinemas, public entertainment, and (now) short-term lets.

Similarly, thousands of firms are eligible for some form of rates relief such as small business bonus, transitional, or rural rates relief.

Retailers embrace many of the aspirations of the fair work agenda and have a vested interest in having higher-earning customers. The industry has been increasing pay at a faster rate than the economy as a whole. However, a more rounded discussion would take into account the total reward package retailers offer colleagues, which often includes a range of other benefits on top of pay. The industry fully supports the statutory living wage which factors in economic conditions and affordability for firms. However, any extension of conditionality along the lines envisaged by the Scottish Government could threaten firms’ licence to operate and substantially impact the operating costs of companies previously eligible for rates relief, often smaller businesses.

Increasing taxes on business and removing their legal ability to trade does not seem the best way to grow the economy. Hopefully, common sense will prevail. What is in little doubt is that the First Minister’s legislative programme will be seen by some as the first real test of the “new deal” accord.

David Lonsdale is director of the Scottish Retail Consortium