Brexit done well could have ma­jor cash up­side

Study: Process could un­leash funds

The Press and Journal (Aberdeen and Aberdeenshire) - - BUSINESS - BY KA­TRINE BUSSEY

Brexit could re­lease a “wall of cash” to com­pa­nies if it is “done well”, the Scot­tish Chambers of Com­merce (SCC) claimed yes­ter­day.

With un­cer­tainty over the UK’s de­par­ture from the Euro­pean Union hav­ing “stymied” in­vest­ment, the or­gan­i­sa­tion said money that had been held back could be re­leased once it is fi­nally com­pleted.

SCC pres­i­dent Tim Allan said that if “Brexit is not just done but done well, there is sig­nif­i­cant po­ten­tial for an up­side”.

He spoke out af­ter the lat­est SCC quar­terly eco­nomic study showed over­all business per­for­mance had de­clined in the last year.

Mr Allan said this had hap­pened “as com­pa­nies take on board ex­tra un­cer­tain­ties caused by the tor­tu­ous progress of the Brexit process”.

He said: “We con­tinue to af­firm the view that a dis­or­derly, no-deal de­par­ture from the EU will have painful, long-last­ing con­se­quences for the econ­omy in Scot­land and the UK. But we also be­lieve that, if Brexit is not just done but done well, there is sig­nif­i­cant po­ten­tial for an up­side.

“Un­cer­tainty has un­doubt­edly stymied cor­po­rate in­vest­ment. We put a di­rect chal­lenge to po­lit­i­cal lead­ers to­day – de­liver a pos­i­tive out­come to Brexit and the econ­omy will ben­e­fit.

“We be­lieve there is a wall of cash that has been pent up while the process of leav­ing the EU has un­folded which can and will be un­leashed.”

He con­tin­ued: “What em­ploy­ers need more than ever is for Scot­tish and UK gov­ern­ments to hone their fo­cus on the needs of the econ­omy.

“Scot­land in par­tic­u­lar suf­fers a long-stand­ing prob­lem of slower eco­nomic growth rel­a­tive to Eng­land and poor pro­duc­tiv­ity com­pared to global peers. We ur­gently need to cor­rect these trends if Scot­land is to de­liver an in­clu­sive econ­omy that pro­vides the jobs, skills and pros­per­ity for the cur­rent and fu­ture gen­er­a­tions.”

The re­search, car­ried out to­gether with the Fraser of Al­lan­der In­sti­tute eco­nomic think-tank, cov­ered the pe­riod June to Septem­ber 2019.

More than three-quar­ters of firms in the tourism in­dus­try are look­ing to take on work­ers, it found, with half these com­pa­nies re­port­ing re­cruit­ment dif­fi­cul­ties. How­ever, ac­cord­ing to the study, the sec­tor demon­strated the most re­silience in the third quar­ter, with in­creases in rev­enue and in­vest­ment un­der­pin­ning con­fi­dence. Mr Allan said there was some “cau­tious op­ti­mism” for the fourth quar­ter.

In the con­struc­tion sec­tor, sales had slowed, while less than a quar­ter of com­pa­nies re­ported in­vest­ment was ris­ing.

And in man­u­fac­tur­ing to­tal sales rev­enue fell back, with sales trends de­scribed as be­ing “sig­nif­i­cantly lower than recorded for the same quar­ter of 2018”.

Mr Allan added: “As the UK faces yet an­other dead­line in the Brexit

“Un­cer­tainty has un­doubt­edly stymied cor­po­rate in­vest­ment ”

process, con­struc­tion and man­u­fac­tur­ing have re­ported se­vere chal­lenges in terms of fu­ture or­ders, ex­ports and in­vest­ment.

“Mean­while com­pa­nies in sec­tors in­clud­ing re­tail and tourism face con­tin­ued chal­lenges in re­cruit­ing peo­ple with the right skills as the num­ber of avail­able work­ers from Europe con­tin­ues to de­cline.”

Professor Graeme Roy, di­rec­tor at the Univer­sity of Strath­clyde’s Fraser of Al­lan­der In­sti­tute, said: “Scot­tish busi­nesses ap­pear to be tread­ing wa­ter as they await clar­ity on the terms of the UK’s exit from the EU.”

Prof Roy added: “The data sug­gests that Scot­land should avoid a ‘tech­ni­cal re­ces­sion’ – de­fined as two con­sec­u­tive quar­ters of neg­a­tive growth – when the next set of official fig­ures are re­leased later on this year.

“How­ever, growth re­mains frag­ile and in­vest­ment lev­els re­main weak.

“A ‘no-deal’ Brexit re­mains the great­est im­me­di­ate risk to the Scot­tish econ­omy. It is mis­guided to ar­gue that ‘no deal’ is bet­ter than fur­ther de­lay. A ‘no-deal’ would not only act as a ma­jor eco­nomic shock but will do lit­tle to curb un­cer­tainty, with the UK’s fu­ture re­la­tion­ship with the EU still need­ing re­solved.”

OUT­LOOK: Tim Allan has chal­lenged politi­cians to de­liver a pos­i­tive Brexit out­come

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