Call for focus on business
Business not featuring as an issue in election campaign, chief executive warns
THE Scotch Whisky Association has said the industry faces headwinds in key export markets, and warned that despite the Smith settlement the constitution appears to be a bigger election theme than business competitiveness and wealth creation.
David Frost, the SWA’s chief executive, told a members’ conference in Edinburgh that the slowing of global trade was challenging the industry, with a limping eurozone, a major crisis in Russia and austerity in China.
“None of this is going to get any easier in the short run ... we all feel under more pressure and are having to work harder to get results.”
Scotch exports are down 3 per cent by volume and 7 per cent by value, but Mr Frost said: “Trends are still working in our favour, we are still consolidating in developed markets.
“In emerging markets underlying growth is strong, especially in big markets like Mexico, Brazil or India. It’s only the problems in China or Russia, or the dreadful economic policy-making in places like Venezuela, that blur the picture.”
He said the alcohol industry partnership with the Scottish government was delivering excellent outcomes and the sector’s new marketing code was “a model of good practice in how to market responsibly in the online world”.
Mr Frost said seven new distilleries had opened since early 2014 and 30 or so projects were in the pipeline. “We haven’t seen anything like this for years,” he added: “These new entrants to our industry will bring extra economic strength and political weight.”
He welcomed the higher profile for Scotland in UK politics “because more systematic focus on Scotland’s needs, by way of infrastructure, skills, connectivity and business support, after the election, can only be good for us”.
But Mr Frost said that after the referendum, Scottish business had urged a stable and sustainable settlement, with any extra powers used to boost competitiveness.
“To put it charitably I am not sure these ideas have been a big theme in the election campaign so far. Of course social spending and greater equality are important, but we will not achieve them unless we have a prosperous and successful business sector here in Scotland and across the UK.”
He added: “Nor will we achieve them if politicians end up casting aside the work of the Smith Commission for short-run political reasons and getting into yet another debate about the constitution.”
Ian Shackleton, head of global beverages research at Nomura, said the US was the fastest-growing ‘emerging market’ for international spirits. “It has gone into super-growth on the back of lower gas prices, and could grow revenues by 4-5 per cent and profits by 7-8 per cent. The real question for Scotch whisky, which has been under-performing, is can you get your share of that growth?”
Fraser Thornton, managing director of Burn Stewart, said single malts were driving all the US growth while blended Scotch was “stagnant and continuing to struggle”.
Mr Shackleton went on: “We have had 30 years of good times in Scotch whisky, we have got used to protectionist barriers coming down, but maybe opening up India will be a slower haul ... and in Russia and eastern Europe you could see barriers going up.”
Paul Lewis, international managing director at Scottish Enterprise,said: “We have been expanding our market presence with specialists on the ground in food and drink, three of the eight new people are in North America.” He said SE offered practical support through its 29 offices in 17 countries, and ran sector-wide programmes on themes such as health and the global industry trend towards “premium and provenance”.
Ross Martin, chief executive of the SCDI, said Scottish export performance was “anaemic” with only 7.5 per cent of companies exporting, compared with 75 per cent in Bavaria. He said whisky ought to be less reticent and more “loud and proud” at home about its success.
Mr Martin said the industry’s valuing of skills-led training alongside higher education was a “strong message to the economy as a whole”.
Carl Paraskevas, senior economist at Lloyds Banking, said Scotch whisky was one of the few national export success stories for a country which “runs a current account deficit the size of Brazil’s.”
WITH just days to go until the General Election, the business community should be concerned.
John Longworth, the director general of the British Chambers of Commerce (BCC), wrote to UK party leaders in December with a call from business for them to act responsibly during the election campaign, and put the UK’s longterm success over political tactics and point-scoring.
All of the major parties responded with a clear commitment to act in the interests of the economy and growth.
With only a few days left in this campaign, it is clear that politicians are not delivering on their promises, so the BCC have written to them again.
The latest letter starts: “While there are some encouraging statements and positive ideas in manifestos, on the campaign trail it seems strategic vision and evidence-led policy announcements have been left on the bus.
“In their place we’ve had tactical headline-chasing and lazy assumptions; a reliance on populist statements, not economic common sense; and niche policy announcements, rather than a focus on the fundamentals.”
The letter then goes on to say: “Worryingly, the parties are also taking it in turns to propose new interventions in markets. These measures simply serve to side-step regulators and experts, rather than strengthening their hand.
“Parties are competing to make ever more strident pledges to freeze taxes and ring-fence spending for the life of the next parliament, without being able to see very far down the economic road ahead.
“No well-run business would tie its hands in this way.”
The BCC went on to add: “And, dishearteningly, we also have policy proposals that, if enacted, would undermine entrepreneurship, aspiration and business growth. We have heard ideas to raid pension savings, create new levies on companies, and limit the tax relief available for genuine wealth creators and small investors, to name but a few.
“Constraining those willing to take the risks needed to grow businesses demonstrates a lack of leadership. It is counterproductive and deeply troubling.”
Businesspeople want to see a clear vision for future success in an ever more competitive and dangerous world. Our shared prosperity depends on it.
At Aberdeen & Grampian Chamber of Commerce, we regularly challenge politicians to confirm what experience they have outside politics and the answer always seems to be “too little”.
Sadly, a lack of understanding about the real world which most of us inhabit is having an all too visible impact on the quality and tone of this disappointing election campaign.
We should expect much more from those who would seek to lead us. Robert Collier is chief executive of Aberdeen & Grampian Chamber of Commerce