Scottish businesses remain optimistic, survey shows

The economy is fragile but businesses are optimistic. Picture: John Devlin
The economy is fragile but businesses are optimistic. Picture: John Devlin
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Businesses in Scotland are “remaining resilient” in the face of a fragile economy, according to an industry survey.

Analysis by the Scottish Chambers of Commerce’s Quarterly Economic Indicator showed optimism continued to improve during the third quarter of 2017.

It also reached levels higher than a year ago in construction, financial and business services, manufacturing and tourism.

The survey, a collaboration with the Fraser of Allander Institute, shows Scottish businesses are “remaining resilient” in the face of uncertainty and a fragile Scottish economy which continues to grow at below trend levels.

Professor Graeme Roy, of the Institute, warned record high employment levels are leading to recruitment difficulties dampened growth and increases costs.

In a foreword to the report, he said: “In such uncertain times, it is even more important that businesses focus on the long-term drivers of growth that they can control - including innovation, investing in productivity improvements, and developing the skills of their workforce.”

Tourism was a stand-out performer over the third quarter of 2017 because of the weak pound’s effect on foreign holidays.

But there was cause for concern in the continued decline in the retail and wholesale sector with sales revenue and cash flow continuing to decline along with employment trends.

These indicators emphasised the importance of a strong performance in the fourth quarter pre-Christmas period.

The survey, was conducted between August 21 and September 14 this year with 384 firms responding.

Anderson Strathern director Neil Amner, also chairman of the Scottish Chambers of Commerce Economic Advisory Group, said: “The results in our third quarterly economic indicator of 2017 point to a broadly positive picture for Scottish business.

“However, the retail sector in particular continues to show decreasing sales, in addition to cashflow and profitability challenges.

“This continues on from our findings in the second quarter which highlighted persistent issues in the retail sector. Levels of inflation have continued to impact on real terms wage growth, which has maintained pressure on household budgets and translated into recurrent challenges for this sector.”

The survey found “broad optimism” across Scottish business, particularly in the financial and business services sector which displayed strong, positive results with sales and profitability at their highest levels for several years.

This translated into increased optimism, with third quarter optimism levels higher than figures recorded across Q3 2015 and Q3 2016.

Mr Amner added: “For many of our industries, recruitment difficulties continue to sit above the long term trend levels, exacerbated by the record high employment figures.

“Concerns continue to be raised by our members when it comes to seasonal workers and the attractiveness of the UK to EEA migrants during the uncertainty surrounding the Brexit negotiation process.

“Furthermore, members in more traditional industries have highlighted issues in attracting younger workers.

“Businesses in sectors such as manufacturing must do more to re-imagine their workplaces to attract future talent, by focusing on increasing autonomy and flexibility in their working practices.”

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