Toughest quarter

‘Halloween horror’ warning as factory exports slump

Paul Sheerin

Paul Sheerin: no deal is ‘unthinkable’ (pic: Terry Murden)

Scotland’s engineering firms are seeing the biggest slump in exports for three years and an industry leader has pleaded with Prime Minister Boris Johnson to drop plans for the “Halloween horror” of a No Deal Brexit.

Order intake has fallen after two positive quarters, and output volume is
negative for the first time since September 2016. Export levels are negative for the first time this year.

Trade body Scottish Engineering said the latest data reflects a “deep concern” across industry that the new Prime Minister and Cabinet are following a course with an “unacceptably high probability”: of a no-deal Brexit, an outcome which business has rejected across the board.

In his latest quarterly review, headed “Halloween Horrors Await”, Scottish Engineering’s chief executive Paul Sheerin says: “The UK’s current position seems unthinkable, in that we have a situation where the government appears to be ignoring the very people and businesses who actually understand what it takes to import and export the goods that sustain our society and economy. And they are saying quite clearly: whatever else you do, don’t do this.”

Companies already have remarked on the drastically deteriorated relations with European trading partners

– Paul Sheerin

Mr Sheerin says the current “brinkmanship negotiations” are not encouraging to companies trading with Europe. “Companies already have remarked on the drastically deteriorated relations with European trading partners as a result of this approach,” he writes.

“Despite detailed planning for a no-deal outcome, including contingencies and alternate arrangements, the stark reality is that no-deal means wasted resource to secure work arounds, added costs for zero value and material uncertainty in business sustainability.

It should come as no surprise then that this deeply concerning situation is reflected in the reported results from our sector looking at the last quarter. Orders are down, significantly for export, as are confidence and output, and our metal manufacturing sector unfortunately looks to have endured the toughest of quarters.”

Addressing a consequence from the same topic, Scottish Engineering’s members have also expressed their concern around the UK government’s immigration white paper, repeating the requirement for flexibility in immigration policy which addresses Scotland’s unique needs.

Three in ten companies reported reliance on availability of non-UK Nationals for skills and resource and six in ten reject the proposed salary threshold of £30,000 for eligible roles.

More than one in four companies (28%) are reliant on EU nationals in the workforce.

Bank reports fall in confidence

Business confidence in Scotland fell nine points during August, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their business prospects, which fell six points to a net balance of zero. When combined with their view on the economy, this gives an overall confidence of minus 9%.

Businesses’ hiring intentions showed that a net balance of 15% of businesses in Scotland expect to reduce staffing levels during the next year, up 12 points on last month.

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