Scottish businesses suffer post-Brexit dent to confidence

Just over 60 per cent of firms polled by economic think-tank the Fraser of Allander Institute believe that a Brexit will have a negative impact on their business. One-third said the effects would be “very negative”, while only 19 per cent said it would have a positive impact.

The study is the first undertaken to gauge Scottish business opinion since last month’s referendum.

Among its findings, some  40 per cent of businesses believe that Brexit could lead to a decrease in their investment and expansion plans while 34 per cent warn they may cut back on recruitment.

Tellingly, more than 70 per cent of those quizzed had done no preparation for the UK exiting the EU.

However, the survey finds little evidence of firms actually cancelling their investment or recruitment plans outright.

Within the minority of firms (25 per cent) indicating that they had already made a decision to change their investment and recruitment plans, the vast majority – 95 per cent – said that decisions had been postponed rather than cancelled entirely.

For around two-thirds of firms the resolution of uncertainty is the key issue in the UK’s negotiation of its exit from the European Union. Just under half cited “access to the single market” as a key concern.

Graeme Roy, director of the Fraser of Allander Institute, which is based at the University of Strathclyde, said: “This is the first hard survey evidence post-referendum of what businesses in Scotland are thinking and how they are responding to the unexpected EU referendum result.

“A clear majority believe that the impact – certainly in the short to medium term – will be negative. The survey offers some evidence that investment and recruitment plans may be being put on hold.”

He added: “Resolving the current political and economic uncertainty must now be the key priority. It is imperative that policy-makers do all that they can to help reduce this source of instability to allow businesses to invest and press-ahead with their recruitment plans.

“The longer the period of uncertainty continues, the more damaging the impact will be on the economy.”

The survey was conducted by the institute between  5 July and 12 July, with 320 firms replying to a short questionnaire.

Today’s report comes just a day after the Scottish Chambers of Commerce’s (SCC) quarterly economic indicator showed that Scottish business performance was generally muted during the lead up to the EU referendum.

Neil Amner, chairman of the SCC’s economic advisory group, said: “The Brexit vote does not come without its opportunities but business must be in the driving seat if we are to take advantage.”