Leaders: Businesses need action as dark clouds gather

Governor of the Bank of England, Mark Carney. Picture: Getty Images
Governor of the Bank of England, Mark Carney. Picture: Getty Images
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SIGNS of slowdown cannot all be blamed on uncertainties over EU referendum

Barely have new MSPs been sworn in than dark clouds are evident across the economy. First Minister Nicola Sturgeon’s plan to create a new cabinet post to focus on growth has been broadly welcomed across the business community. The decision to split the post of finance secretary into two roles with the creation of a business development minister is an overdue recognition that Scotland’s economy faces, in the First Minister’s words, “very significant challenges” and “continuing fragility”.

The challenges are formidable. Signs of slowdown are by no means confined to Scotland but are spread across the UK economy, dampening expectations of what a Holyrood administration can achieve on its own.

This has been driven home by the decision of the UK’s biggest business lobby group, the Confederation of British Industry, to cut its growth forecasts. Its latest quarterly forecast predicts that the UK will see 2 per cent GDP growth in both 2016 and 2017, down from previous estimates of 2.3 per cent and 2.1 per cent respectively.

The warning comes after Bank of England governor Mark Carney said a Brexit vote could trigger a “technical recession” and see the pound plunge in value. The Bank also slashed its growth outlook for the next three years.

Both these downgraded forecasts place heavy emphasis on uncertainties over the EU referendum. While uncertainty over the outcome will have caused some businesses to put investment plans on hold, signs of a slowdown have been building for many months and were evident some time before the date of the EU referendum was known.

The same applies to retail spending data. And while political uncertainty is a near permanent condition of business life, it is more likely that continuing low growth in discretionary household incomes, a reversal of falling unemployment and the cold spring have been more powerful factors. Given these, it is hard to tell which may prove more problematic for business and consumer confidence: the referendum or the dire warnings from the IMF and the Bank of England, both bodies having erratic and flawed forecasting records.

Much has been made of the possible impact on sterling and a fall in the currency. But for the UK having incurred a colossal £13.3 billion trade deficit in the first quarter, the largest since 2008, a sterling devaluation may neither be a surprise nor that unwelcome.

The slowdown has been particularly marked in Scotland, reflecting the impact of the collapse of oil prices on the North Sea oil industry and the specialist engineering and service firms dependent on oil-related work.

The oil price has staged a fitful recovery in recent weeks, while the onset of more clement weather should have brought some relief for the construction, retail and tourism sectors. But this is no substitute for a continuing commitment to infrastructure and capital spending, and measures to relieve the burden of business rates where relentless increases in recent years have hit high streets hard. Concerted action to help business, enterprise and investment is badly needed.

The fashion for mix and match

Does the Duchess of Cambridge collect Brownie points or brickbats when she dresses up? Or when she dresses down? TV presenter Lorraine Kelly has made an astute observation about Kate looking comfortable in clothes from Zara and Topshop during a recent tour of India.

She says the princess looked great in a Topshop dress priced at £75. But when she wears “high street”, critics say she is not dignified enough; but if she wears designer clothes she is accused of spending a fortune on clothes.

It is a dilemma not only for members of the Royal Family, but for all women in the public eye. They are expected to wear aspirational clothes and to show off the best in high couture. But they must also appear to be in touch with the realities of modern life for millions of women and opt for clothes that are smart-looking but accessibly priced.

There’s no easy solution to this. The best guidance may be to have a keen eye on the occasion and wear outfits that are both physically and socially fitting. A walkabout engagement in a foreign country with a warm climate would surely favour a practical and comfortable ensemble that is smart without being out of place or ostentatious.

Equally, if the engagement is a gala night at the opera, something out of the ordinary is required. Couturiers need to be inspired by clothing that is exceptional, while the morale of beleaguered high street retailers will be boosted by stylish outfits that are popularly priced and widely accessible.

Arguably the greatest accoutrement in trend-setting appearance is the element of surprise. For there’s nothing more likely to attract the cameras than an outfit that is absolutely à la mode – yet one which few expected.