Firms cautious on jobs growth as Brexit looms

Sterling weakness fails to provide expected boost to export hopes

SCOTTISH companies are taking a more cautious approach amid political and economic uncertainty triggered by the Brexit vote, with significantly fewer planning to increase employment over the next 12 months, a survey has revealed.

The survey, published today by accountancy firm Grant Thornton, also shows that only 11 per cent of Scottish companies are eyeing an increase in exports, even though the pound’s plunge since the Brexit vote will have helped their competitiveness in overseas markets.

On a more positive note, the survey found Scottish businesses’ confidence levels were among the highest in Europe and among the Group of Seven leading industrialised nations.

The survey shows only 34 per cent of Scottish companies plan to raise headcount in the coming year. Grant Thornton noted that, in the previous quarterly survey, 44 per cent had planned to increase their workforce on a 12-month view. In the corresponding survey a year ago, 53 per cent of Scottish companies expected to raise headcounts on a 12-month time horizon.

The international survey of 2,500 businesses included 53 Scottish companies operating in a broad range of sectors.

Of the Scottish firms surveyed, 45.3 per cent said they were quite confident about the outlook for their country’s economy on a 12-month view and 7.5 per cent said they were very optimistic. Meanwhile, 3.8 per cent were very pessimistic. And 13 per cent were slightly pessimistic.

Debbie Mayor, head of international at Grant Thornton in Scotland, was encouraged by the resilience of business confidence north of the Border.

However, she also cited “warning signs” amid the greater political and economic uncertainty arising from the UK electorate’s June 23 vote to leave the European Union.

She said: “The latest set of data provides some reassurance during a time of great uncertainty. Businesses in Scotland remain resilient and focused on driving forward their growth ambitions.

“But, despite that positive news, there are clearly some warning signs. With relatively few companies planning to increase employment and export figures falling short of what we might expect, it’s clear we need to address some of the critical issues facing the country’s economy in the coming months.”

The survey shows 11.3 per cent of Scottish companies plan to increase exports on a 12-month view, up only marginally from a corresponding 10.9 per cent at the same time last year in spite of the tumble in the pound. Meanwhile, 26.4 per cent forecast exports would stay the same, with 1.9 per cent projecting a decrease and 60.4 per cent saying they were unsure or the question was not applicable.

Ms Mayor added: “It’s particularly challenging for businesses to plan ahead when potentially game-changing political decisions are anticipated, from single-market access to Scottish independence. A collaborative approach by business leaders will help tackle the challenges that lie ahead and focus on sustainable, resilient long-term growth.”

Of Scottish companies surveyed, 45.3 per cent plan to increase investment in plant and machinery, while 49.1 per cent expect to keep it the same. Meanwhile, 23.6 per cent expect to increase investment in research and development over the next 12 months.