Good news alert: world has not ended
Good news, they say, travels fast. But you’d hardly guess it from the perpetual posture of handwringing that marks the SNP administration these days.
If it is not whingeing about austerity cuts it is in deep foreboding mode over the consequences of the referendum vote to leave the EU.
The latest lament from the First Minister is that our national misery over austerity “caused” the country to vote for Brexit – though that might make it difficult to explain why Scotland voted so heavily to Remain: were we not as badly affected as the rest of the UK?
But this week has brought news – or more accurately, further news – that Brexit consequentials are not conforming to Armageddon type. And it comes on top of signs of a more positive month for Scotland’s economy than the official posture of despair suggests.
For the benefit of readers who may have succumbed to despair – and particularly for Mike Russell, now appointed the new “Minister for Brexit” – here is a counter-factual.
His appointment follows signals from Sturgeon that she has cooled from demanding a fresh independence referendum to seeking to secure as good a Brexit deal as possible. This shift follows those first zephyrs of leaf-rustling dissent in the SNP: the warnings from veteran Alex Neil and Kenny Macaskill on pushing for an early vote.
Not all in Scottish business are stopped in arthritic despair. A quarterly survey out this week shows that Scotland’s tourist industry has been boosted through the summer season, helped by the lower pound in the wake of the Brexit vote.
It shows business confidence has risen, suggesting a modest growth in output from the economy in the second half of this year. The survey, by Royal Bank of Scotland, of opinion from 450 businesses showed slightly more firms reporting a boost to output volumes than those seeing decline.
And expectations of the next six months are also positive, with 33 per cent of firms foreseeing a rise in volumes and 26 per cent expecting a decline.
A Cinderella sector of little consequence for our well-being? The government’s own figures indicate total visitor spending last year hit £8.9 billion, when we attracted 14.6 million visitors. Spending by tourists in Scotland generates around £12bn of economic activity in the wider Scottish supply chain and contributes around £6bn to Scottish GDP. And employment in tourism-related industries stands at around 196,000, or almost 8 per cent of employment in Scotland.
The survey follows on the heels of an authoritative Bank of Scotland annual survey of the food and drink sector showing a post-brexit uplift in business confidence and growth expectations compared with 12 months ago.
The survey, carried out in July, found half of all firms said the referendum result had caused them to raise their business growth estimates. They plan to invest an average of 56 per cent of their current annual turnover over the next five years, significantly higher than the 40 per cent figure last year. And across the sector, firms expect to increase their turnover by an average of 24 per cent over the next five years.
Nor are the signs of resilience confined to these two sectors. Inverness-based economist Tony Mackay writes in his monthly report on Scotland’s economy that September has been “a more positive month”.
There is certainly no lack of “lowlights”: more North Sea lay-offs, housing completions running more than 2 per cent below last year, a fall in inward investment projects and Scottish Engineering reporting the lowest orders since 2009.
But the list of September “highlights” extends to more than 20 items – prominent among these being news of 100 new jobs at Falkirk-based Alexander Dennis, Ross-shire Engineering winning a £200 million contract to create 120 jobs, ID Systems to create 120 jobs in Glasgow, Lidl to create 100 jobs for its new distribution centre at Eurocentral Lanarkshire and the French owners of Michelin confirming a £15m investment at Dundee despite the Brexit vote.
I’ve excluded from this “good news” list the £527m collected by Revenue Scotland in its first year: perhaps there’s only so much upbeat news the Scottish Government can absorb in one month.
Now all this comes with a shed load of caveats. Article 50 has not yet been activated and serious Leave talks may not start until late next year. And there are rising concerns of a global trade slowdown under way as central banks seek to break away from the era of ultra-loose monetary policy.
But these pointers run counter to talk of business gloom over Brexit. The broader picture across the UK suggests a rather more mixed picture of our fortunes than those warnings of deep foreboding that rained down in June.
We had the admission from the ONS chief economist that “the referendum result appears, so far, not to have had a major effect on the UK economy.” August retail sales Ukwide were surprisingly strong after an exceptionally buoyant July figure.
The Society of Motor Manufacturers and Traders reported that August car output was the strongest August for 14 years. Exports were especially buoyant. The CBI has said their latest Industrial Trends Survey suggested that manufacturing to grow well.
Employment continues to grow and unemployment fall (three months to July). Average earnings growth is easily outstripping prices inflation. House prices have shown resilience and mortgage demand, far from declining with a hit to household confidence, rose almost 7 per cent month-on-month in August and by 15 per cent year-onyear to an estimated £22.5bn – the highest August figure since 2007.
All this could judder to a halt next year as attention increasingly comes to bear on the details of the Brexit negotiations. The much-quoted Fraser of Allander Institute now predicts the economy in Scotland will grow by just 0.9 per cent this year and a mere 0.5 per cent next.
However, not all are so gloomy, with Tony Mackay predicting 1.6 per cent growth for this year and 1.8 per cent in 2017 – three times the growth rate cited by FOA.
Gloomsters will point to the latest survey from the Federation of Small Businesses showing confidence among small firms in Scotland has fallen to its lowest in five years. And firms here were found to be more pessimistic than in other parts of the UK. Yet the survey also revealed a willingness to invest, with a 24-point positive gap between those planning to expand spending and those intending to cut back.
Moreover, the reading on small firms’ views on output has been in decline since the middle of 2015, with the “state of the domestic economy” seen as the key problem by many. A majority of Scottish businesses have been pessimistic about business prospects for the past nine months.
Our problems here – principally the traumatic decline of the North Sea sector – are more domestic and immediate than “Brexit consequentials”. And they require address by other government ministers rather than an earnest catalogue of misery. Please, Mr Russell, don’t become just another Minister for Woe.
Gloomy predictions over Brexit have not come to pass so far and there are positive developments to report, says Bill Jamieson