The Courier & Advertiser (Fife Edition)
Clouds hang over positive economic performance
Recruitment a major issue for firms
Scottish Chambers of Commerce has warned of a possible contagion risk within the economy as disposable incomes are squeezed.
The business group’s latest quarterly economic indicator report found significant concerns in the retail sector.
Of the retailers surveyed, almost half reported they had seen falling sales and lower profits in their business as consumers tightened their belts in response to falling incomes in real terms.
Neil Amner of Anderson Strathern and chairman of the SCC’s economic advisory group said there was a longer- term risk that other sectors of the economy could also be impacted.
He said: “The retail sector is perhaps most exposed to pressures on household budgets. Consumer demand drives around three quarters of Scotland’s economic growth, so unless the recent falls in real earnings are reversed, there is a risk that the impact could spread to the wider economy.”
Despite the cautionary note, the report, released in collaboration with the Fraser of Allander economic thinktank, was broadly positive about current economic performance.
It found Scotland’s construction sector had improved since the start of the year, manufacturing was producing strong results and the financial and business services sector had achieved their highest profitability and employment levels for two years.
However, it did also flag growing issues for businesses in accessing the talent they need to grow.
“Those recruitment pressures, underline the need for early agreement on the rights of existing EU workers to live and work in the UK and for the UK’s future migration policy to be driven by business need,” Mr Amner added.
“We are continuing to hear anecdotal evidence from businesses of a slow but steady drift of EU workers out of the UK.
“For Scotland, that has to stop if our current recruitment problems are to be reversed.”