Scottish Chambers of Commerce’s Quarterly Economic Indicator engages with five of Scotland’s key business sectors: Construction, Financial and Business Services, Manufacturing, Retail & Wholesale, and Tourism.
These findings, released in collaboration with the University of Strathclyde’s Fraser of Allander Institute show the position of businesses for the third quarter of 2016. This is the first Quarterly Economic Indicator to have been conducted since the EU Referendum.
Neil Amner, Chair of the Scottish Chambers of Commerce Economic Advisory Group, said:
“The underlying challenges facing a broad spectrum of businesses are around lower expectations of profitability and tightening margins which, in turn, are impacting on the ability of businesses to invest. This is a clear reason why our UK and Scottish Governments must use the opportunity presented by the Autumn Statement and Scottish Budget to deliver a clear commitment to investing for growth and to lowering the costs of doing business. With the Chancellor indicating a softening of austerity, room must be created for reductions in taxes, for example, VAT to boost consumer spending or to incentivise our tourism industry, or, in the Scottish Government’s case, business rates, to tackle the core fixed costs of doing business.
“The Scottish Government is currently undertaking a series of reviews, including our business rates regime and the enterprise and skills services. The business expectation is that this will result in radical change, not just more of the same.
“The overall picture painted by these results is one of a Scottish economy that is growing, but growing slowly. Within that we are seeing some sectors such as Construction and Tourism gaining ground over the summer period, whilst the retail sector in particular appears to be pessimistic, with retailers telling us that the weakening of sterling has led to rising costs which, in turn, is impacting on profit margins.
“We know that the Scottish economy has grown at a generally far slower pace than that of the UK as a whole since the early part of 2015 and there are a range of factors which have influenced that, including the impact of the collapse of global oil prices, which began in 2014. Despite the fact that we are now beginning to see far less negative results from businesses in the oil and gas sector than at any time in the last year, we expect continued consequences of low oil prices to be manifested in the short to medium term.
“A clear positive from the results of this survey is that Scottish businesses are continuing to recruit and create new jobs. However, recruitment difficulties are being reported across a range of sectors and this underlines the need for business to have access to the widest possible pool of talent. That is why we will oppose any plans from the UK Government to restrict access to international talent through the tightening of post study work options. On the contrary, the UK Government should be supporting business by guaranteeing now the right of EU citizens to remain and work in our economy.
“Brexit hasn’t happened yet and despite the fact that we seem to have avoided a short term economic shock from the EU referendum vote, there are already clear potential challenges ahead. We now know more detail around the timescales for Brexit but we do not know what the final outcome will look like. Whatever these outcomes may be, business cannot and will not go on hold for the next two years. Prudent businesses are already planning for various scenarios in order to identify possible exposure to Brexit but also to identify the potential opportunities and, if our Governments work alongside us, we will be well placed to demonstrate resilience and emerge stronger in the new trading environment.”