Brexit and business
Sir, The retail industry is undergoing significant transition as it adapts to changing shopping habits against a backdrop of pallid sales, lower footfall, rising costs and thinner profits.
Retailers are working ever harder to maintain let alone grow sales and are responding positively to the challenges that profound structural change brings through innovating and becoming more productive, by investing in new online and logistics capabilities and a higher skilled workforce.
2018 holds a brighter prospect if improvements on the employment and population front continue and if real wage growth resumes.
Of keen interest to the industry this coming year will be the next steps with Brexit and the prospects for Scotland’s economy.
Putting consumers first in the Brexit negotiations and securing a lasting tariff-free trade deal with the EU is imperative, and will help retailers to keep down prices in shops. It will ensure that ordinary shoppers aren’t hit with the cost of unwanted new tariffs.
There needs to be a much more thorough debate in 2018 about how our governments will help stimulate private sector growth and about the boundaries of regulatory intervention in the economy.
Lifting private sector investment will be key. The switch to using the CPI measure of inflation for next spring’s uplift in business rates is a positive step, but government-imposed costs continue to escalate and are increasingly difficult to absorb. This results in firms diverting cash and resources away from growing the business.
For example, firms here in Scotland have little ability to claim back the money they fork out in apprenticeship levy, unlike their counterparts in England.
The large business rates supplement remains higher here than down south, and we now find government is considering a new Scotland-only supplementary rates levy on retail warehouses and out-of-town retail premises. Ministers are also pressing ahead with a deposit return scheme for drinks bottles, but with little sense as to the cost to consumers or businesses.
The implications for consumer spending from the decision to dip into consumers’ pockets to the tune of £164 million in extra income taxes remains to be seen, but less money in consumers’ pockets will cause shoppers to carefully consider what purchases they can afford.
If government fluffs the opportunity to bear down on the costs of doing business and the cost of living over the coming year then it risks failing to stem the decline in retail jobs and shops, especially in our more economically fragile communities.
Every policy should be tested against a simple benchmark - will it make Scotland the best place for retailers to invest and expand.
David Lonsdale, director, Scottish Retail Consortium