EU ‘uncertainty’ hits business

BUSINESS optimism in Scotland is at its lowest level for more than three years after the European referendum left a ‘cloud of uncertainty hovering over industry’.

The CBI Scottish Industrial Trends survey found that orders and output were ‘growing more quickly than the UK as a whole’ during the period March to June this year.

However, the study of 46 manufacturing firms, carried out just after the UK voted to leave the European Union, found optimism was at its lowest since April 2013.

Almost half (47 per cent) reported an increase in new orders, with about a fifth (21 per cent) suffering a decrease. The difference between the two – at 26 per cent – is the highest since July 2014. The comparable figure for the UK was only 9 per cent. Growth also reached a level not seen since July 2014, with half of companies saying their volume of output was up in the three months, while 15 per cent reported a fall.

The figures for new domestic orders were the best since July 2014, while orders for export grew for the first time in over a year.

Despite this, the survey – completed between June 27 and July 13 – found declining optimism about the business situation.

While 17 per cent of respondents were more positive than they had been three months ago, 45 per cent were less optimistic.

CBI chief economist Rain Newton-Smith said: ‘Scottish manufacturers picked up the pace over the second quarter, with orders and output growing more quickly than across the UK as a whole. However, the signs are that the Scottish manufacturing recovery may be short-lived due to the cloud of uncertainty hovering over industry following the EU referendum.

‘We see this in falling optimism and lacklustre investment plans. This comes after last week’s GDP figures, which suggested Scotland’s wider economic growth had stalled well before the referendum.’

Miss Newton-Smith added: ‘It’s important now for the new UK Government to work in close collaboration with the Scottish Government to steady the ship with a plan, and a clear timetable, for negotiating the UK’s relationship with the EU.

‘This, along with a renewed focus on industrial strategy, will help give firms the confidence they need to grow and create jobs.’