Businesses hit by pessimism as jobs outlook below average
Survey shows EU referendum’s creating uncertainty
BUSINESSES in Scotland are, overall, the least confident in the UK, with growth in staffing north of the Border significantly weaker than elsewhere, a key survey has revealed.
Uncertainty in the wake of the independence referendum and questions over the UK’s continued membership of the European Union were cited as possible reasons for overall pessimism among businesses in Scotland. And weakness in the oil and gas sector, following a tumble in crude prices, was cited as a factor in the relatively poor jobs outlook north of the Border.
The quarterly survey from the Institute of Chartered Accountants in England and Wales (ICAEW) and Gr ant T hor nton was conducted ahead of the General Election, with the results published today.
The survey showed that, for the first time in three years, the number of Scottish businesses declaring they were more pessimistic about the prospects for the coming year, compared with the previous 12 months, was greater than that expressing a greater degree of optimism. And Scotland’s resultant business confidence score, of -7.4, was much worse than the UK average of +16.6. The business confidence score for Scotland in the previous quarterly survey was +3.6.
ICAEW Scotland president Andrew Hewett cited greater uncertainty in Scotland as a possi- ble reason for the weak confidence reading, citing the aftermath of last September’s independence referendum and the looming poll on UK membership of the EU.
Mr Hewett described the latest business confidence reading for Scotland as “disappointing”.
He added: “The aftermath of the referendum, the run-up to the General Election, the forthcoming Holyrood elections, and the…EU referendum combine to mean that there is, potentially, an even deeper degree of uncertainty in Scotland than there is elsewhere in the UK, a feeling which is reflected in Scottish confidence levels.”
Prime Minister David Cameron went into the General Election with a promise of a referendum on the UK’s continuing membership of the EU by 2017. He has since highlighted his commitment to a referendum. This looming poll has created uncertainty for businesses throughout the UK over the crucial issue of EU membership.
The survey found that, based on average responses, there was only a 0.7 per cent increase in headcounts among Scottish businesses in the last 12 months. And the rate of increase of staffing over the next 12 months was expected to weaken further, to just 0.3 per cent.
The survey signals Scottish companies have suffered slowdowns in growth of turnover, profits, and exports.
ICAEW and Grant Thornton highlighted the finding that the outlook for recruitment was particularly weak in the oil and gas sector in Scotland.
They also cited UK Government plans to cut public spending as a potential drag on the Scottish economy.
ICAEW and Grant Thornton said: “The public sector is a major employer in Scotland, accounting for around 23 per cent of jobs. Given that the new UK Government plans cuts to public spending over the course of the next few financial years, a slowing of private sector job creation has the potential to impact dramatically on the Scottish labour market.”
The survey found that companies in Scotland, overall, expected turnover growth over the next 12 months to be only slightly more than one per cent. Over the previous 12 months, turnover growth was 3.4 per cent.
ICAEW and Grant Thornton said: “The weak employment outlook over the coming year is likely to be weighing on businesses’ ex pe c t at ion s f or domestic demand.”