Scottish Budget boost
Election provides boost to Scottish business confidence
Graeme Roy: ‘signs of a turnaround’ (pic: Terry Murden)
Scottish business confidence has been boosted by the clarity provided by the decisive general election result, according to one of the first surveys since the poll.
Expectations of growth in the Scottish economy over the next year have also improved, with more firms believing the outlook for growth is ‘moderate’, and fewer believing it to be ‘weak’.
However, businesses remain cautious about how Brexit negotiations could impact on them and new business activity remains weaker than a year ago. But expectations of new business look optimistic across all sizes of enterprise.
The Scottish Business Monitor, produced by the Fraser of Allander Institute and law firm, Addleshaw Goddard, drew responses from about 500 businesses between mid-December and January.
Its findings contrast with a gloomier survey produced last month by Institute and the Scottish Chambers of Commerce which was based on sentiment in the run-up to the election.
It is published on the day of the Scottish Budget when Finance Secretary Derek Mackay is expected to give his own assessment of the economy and the impact of Brexit.
Business groups are demanding no further divergence in taxes north and south of the border. They will argue that an upturn in sentiment allows Mr Mackay to avoid squeezing businesses through additional costs that will hold back growth.
This survey provides one of the first robust indicators of post-election economic conditions– Malcolm McPherson, Addleshaw Goddard
Commenting on the findings of the survey, Graeme Roy, director of the Fraser of Allander Institute, said: “Whilst there is little evidence of a significant ‘Boris Bounce’ in Scotland, the results of this post-election Scottish Business Monitor show some signs of a turnaround in sentiment within Scotland’s business community.
“The survey results show a shift away from firms reporting that they see the outlook as ‘weak’ to one where they are now ‘moderately optimistic’ about what the next six to 12 months will bring.
“So perhaps no cause for major celebration – particularly with many businesses reporting ongoing concerns about how the Brexit negotiations may evolve over 2020 – but a welcome finding after a challenging 2019.”
Malcolm McPherson, senior partner at Addleshaw Goddard in Scotland, said: “This survey provides one of the first robust indicators of post-election economic conditions and is therefore a timely measure of business sentiment.
Trade negotiations are looming
“The figures show that, while last month’s general election has provided a degree of clarity for business, firms remain uncertain of the future as EU trade negotiations loom.
“Nevertheless, this picture of relative fragility must be set in context with the figures indicating that Scottish businesses on average experienced continued growth in Q4.
“While expectations of future business activity and turnover appear more optimistic across all businesses, there seems to be less confidence in the level of future capital investment and export activity.
“Furthermore, a majority of businesses expect increasing cost pressures in the coming months and have poor expectations of future export activity, which puts future growth in question.”
Scottish Chambers of Commerce CEO Liz Cameron said Mr Mackay must refrain from adding yet further costs to business operations.
“We hope that we hear plans which will focus on investing in infrastructure, supporting skills development and a partnership driven by the needs of business at its foundation,” she said.