No-deal Brexit uncertainties hit the Scottish economy, report warns
The prospect of the UK leaving the EU without a deal weakened the Scottish economy in the last quarter, a Scottish Chambers of Commerce (SCC) report has found, leading the organisation to call for “urgency” in dealing with Brexit to boost Scotland’s ability to compete in international markets.
SCC’s Economic Indicator survey for the first quarter of 2019 found that key Scottish industrial sectors experienced a slowdown in investment as business costs and preparations for Brexit took “top priority”.
According to the report, the construction and retail sectors experienced “the biggest wage increases in over a dozen years” and, apart from construction, investment performance in every sector was lower year-on-year.
Only the retail sector showed any level of business confidence in comparison to the previous quarter’s report, with optimism lower in all other sectors. Confidence in the manufacturing sector is now at its lowest since 2012.
Tim Allan, Chairman of the Scottish Business Advisory Group and President of Scottish Chambers of Commerce, said: “There is an immediate urgency to deal with Brexit, which is hampering our ability to compete on the international stage. We see this borne out in the decline in confidence, difficulties in recruitment and challenges in exporting.
“Furthermore, restraint on plans to invest will do nothing to solve Scotland’s ongoing productivity challenge which requires sustained levels of investment in skills and training if we are to see the shift the economy needs.
"Our survey has shown some real areas of robustness which highlights the resilience of Scottish businesses and their resolve to stay focused on creating jobs and paying taxes to fund vital public services. But the pressure on Scottish firms is rising, with the prospect of increased costs due to inflation, currency volatility, Brexit preparations and the prospect of increased taxation remaining as top concerns for all sectors."
Professor Graeme Roy, Director at the University of Strathclyde's Fraser of Allander Institute, said: “the lack of clarity about the UK’s terms of exit from the EU continues to cast a shadow over day-to-day decision making, with businesses clearly struggling to make long-term plans in such times.
“Weak business investment has been a feature of recent times, and this latest survey shows that firms are becoming even more reluctant to make investment decisions at this present time.”