Businesses already suffering 'cost of the chaos' from Brexit
Scottish businesses are “weighing the costs of the chaos” caused by Brexit, suffering rising business costs, economic slowdown and less investment due to prolonged uncertainty around the UK’s position in the EU, the Scottish Chambers of Commerce (SCC) says.
The latest Quarterly Economic Indication survey for the second quarter of 2019 revealed most sectors in Scotland reported rising cost pressures – from raw material prices and overheads – related to Brexit preparations.
Sixty-four per cent of manufacturing firms and 52 per cent of construction firms reported “rising raw material prices as their top cost pressure”.
Manufacturing reported the biggest impact from Brexit uncertainty “as stockpiling in Q1 means capacity utilisation was at its lowest level in 10 years”, the report said.
Every sector reported increasing wages over the quarter apart from retail, which SCC said showed “firms are having to pay more to retain the talent as the supply of skilled workers eases”.
SCC president Tim Allan said businesses were “weighing the costs of the chaos caused by more dithering over Brexit and the burden is severe”.
“Our members are crying out for the return of some sanity as they undertake the important role of creating jobs and paying taxes,” he said.
“Whoever the next prime minister will be, they must take brisk action to unlock investment and instil confidence back into the UK economy.
“Scottish businesses need to see steps being taken to avoid a disorderly Brexit and a responsible consensus reached as soon as possible on the Brexit process with the European Union.”
Allan said Scottish companies were facing “a barrage of challenges” around rising costs and recruitment, but were delaying major projects over fears there would not be the investment.
“In the majority of sectors, we are seeing investment being put on hold and firms are saying that they expect that to continue in the next quarter,” he said.
“When firms are having to hold back on investment decisions, it delays major projects, growth, and limits overall productivity of the economy.”
The SCC's first quarter report found that key Scottish industrial sectors experienced a slowdown in investment as business costs and preparations for Brexit took “top priority”.