SCC Quarterly Economic Indicator Q3 2019
The latest Scottish Chambers of Commerce (SCC) Quarterly Economic Indicator in partnership with the University of Strathclyde Business School’s Fraser of Allander Institute survey for Q3 of 2019 has been published (October 11).
The Survey shows that businesses continue to struggle due to factors caused by Brexit uncertainty in the most recent quarter. Confidence remains on a downward trend in most sectors compared to the same period last year. Yet businesses, particularly in the financial and business services sector, are cautiously optimistic that a positive outcome to Brexit on 31 October could start restoring confidence in the Scottish economy.
- On recession risk: data suggests that Scotland should avoid a ‘technical recession’ - defined as two consecutive quarters of negative growth – when the next set of official figures are released later on this year.
- On the construction sector: The net balances investment – total, capital and training – all fell into negative territory in Q3, with the level of work in progress at the lowest level in six years.
- On the retail sector: Confidence dipped in the retail and wholesale sector in the quarter as revenue trends fell back. Domestic issues such as business rates and competition – online and on the high street – remain key concerns.
Commenting on the results, Professor Graeme Roy, Director at the University of Strathclyde's Fraser of Allander Institute, said, “Scottish businesses appear to be treading water as they await clarity on the terms of the UK’s exit from the EU.
“The data suggests that Scotland should avoid a ‘technical recession’ - defined as two consecutive quarters of negative growth – when the next set of official figures are released later on this year. However, growth remains fragile and investment levels remain weak.
“A ‘no deal’ Brexit remains the greatest immediate risk to the Scottish economy. It is misguided to argue that ‘no deal’ is better than further delay. A ‘no deal’ would not only act as a major economic shock but will do little to curb uncertainty, with the UK’s future relationship with the EU still needing resolved.”
Tim Allan, Chairman of the Scottish Business Advisory Group and President of Scottish Chambers of Commerce, said, “Our research shows that overall business performance has declined in the last year as companies take on board extra uncertainties caused by the tortuous progress of the Brexit process.
“The challenges businesses face are laid bare in the Scottish Chambers of Commerce Quarterly Economic Indicator for Q3. As the UK faces yet another deadline in the Brexit process, construction and manufacturing have reported severe challenges in terms of future orders, exports and investment. Meanwhile companies in sectors including retail and tourism face continued challenges in recruiting people with the right skills as the number of available workers from Europe continues to decline.
“We continue to affirm the view that a disorderly, no-deal departure from EU will have painful, long lasting consequences for the economy in Scotland and the UK. But we also believe that, if Brexit is not just done but done well, there is significant potential for an upside.
“Uncertainty has undoubtedly stymied corporate investment. We put a direct challenge to political leaders today – deliver a positive outcome to Brexit and the economy will be rewarded with a wall of cash that has been pent up while uncertainty has reigned in recent years.
“What employers need more than ever is for Scottish and UK governments to hone their focus on the needs of the economy. Scotland in particular suffers a long-standing problem of slower economic growth relative to England and poor productivity compared to global peers. We urgently need to correct these trends if Scotland is to deliver an inclusive economy that provides the jobs, skills and prosperity for current and future generations.”
A copy of this report can be downloaded from the Scottish Chambers of Commerce Network
Published: 11 October 2019