Expectations remain high
Reforms and rule changes prompt firms to invest
Neil Amner: investment increasing
Scottish businesses are showing a greater willingness to invest as they face up to changes such as new privacy rules and business rates reform.
While business confidence remains fragile in some sectors, firms are looking to invest in capital and training to improve their prospects in an uncertain economic environment.
According to the latest quarterly survey from Scottish Chambers of Commerce and the Fraser of Allander Institute construction remains an area of concern, with overall sales revenue down, alongside public-sector orders.
However, there are some encouraging signs for the sector, with private commercial orders up significantly, and key financial indicators such as cash flow and profitability returning to positive levels.
The retail and tourism sectors also continue to face challenging domestic conditions.
Neil Amner, chairman of the Chambers’ economic advisory group, said: “While the economy has not been without challenges, most sectors are reporting increasing levels of investment across capital and training.
“A number of factors will underlie this. Legislative change, whether through industry wide regulations such as the GDPR, or through reforms to the business rates system via initiatives such as the Business Growth Accelerator, is encouraging firms to upskill their staff and push forward on capital investments.
“This upswing in investment trends does not come without expectation however. Every sector in our report, from Construction to Tourism, expect to see sales revenues increase in the second quarter, with firms anticipating that this investment will gain rapid returns.
“It is clear that businesses are adapting to the changing economic environment and have positive expectations for the quarter ahead.
“To achieve the gains that companies are anticipating, we look to policymakers to mirror the agility and adaptability shown by the private sector, particularly on areas such as increasing Scotland’s exporting performance, creating a favourable tax environment and an attractive migration policy.”
Professor Graeme Roy of the Fraser of Allander Institute, said: “Whilst weak business investment has been a feature of Scotland’s economy in recent times, the survey suggests that levels of investment have increased significantly over the last year.
“As we have previously highlighted, in times of uncertainty, it is important that businesses focus on the drivers of growth that they can control such as investing in their own productivity and efficiency, and in developing the skills of their workforce.”