With official figures painting a picture of lacklustre growth in Scotland’s economy, the Scottish Chambers of Commerce Quarterly Economic Indicator (QEI) offered some respite from the January blues.
The results of the survey, produced in partnership with the Fraser of Allander Institute, showed that, for all the challenges of 2017, businesses in Scotland are defying the “uncertainty” that characterises these times. Against a trend of what the Institute’s Prof Graeme Roy calls “positive but modest growth,” the survey showed evidence that optimism was holding up in financial and business services and manufacturing.
Retailers, although continuing to feel the pressure from the burgeoning ecommerce sector, enjoyed a better Christmas than in recent years, with sales seeing a “significant increase” in the final quarter of 2017. Similarly, activity in the construction sector has also strengthened, according to the survey. Against this were signs that the boom in Scottish tourism was tailing off, although time will tell whether that proves to be a blip or a trend.
Heightened levels of uncertainty make it unsurprising that investment intentions remain modest, whilst the tight labour market means that many firms continue to report difficulties in recruiting staff. It is encouraging that investment in training is holding up.
“Uncertainty” is of course partly attributable to Brexit. This month’s Scottish Government paper Scotland’s Place in Europe calculated that a no-deal Brexit would cost the Scottish economy up to £12.7bn by 2030. This, and more recent forecasts by the chief economist, set a precedent for the delineation of worst-case scenarios that would presumably be followed if Brexit prompts the Scottish Government to hold a poll – as the paper suggests – on Scotland’s “membership of the EU as an independent state.”
In the realm of factors that business is able to influence, the QEI’s authors stress the importance in uncertain times of investing in their own productivity and efficiency, and developing the skills of their workforce. Also under their control is the strength of a commitment to increase exports beyond the UK and beyond Europe, taking advantage of the knowledge and experience available from public and private sector sources, as well as Scotland’s well-respected and successful business diaspora.
For its part the Chambers network is working hard to connect its members with potential trade partners. Recent initiatives include a memorandum of understanding between SCC Network and the UK-Ghana Chamber of Commerce, driven by Aberdeen Chamber of Commerce. Lochaber Chamber is leading a trip to Nova Scotia next month, just as Glasgow Chamber heads to Manhattan for their second business-to-business mission.
In April, SCC consolidates its relationship with the 100 million-population Shandong Province in China, with the largest ever private sector-led mission to this vast market. Our view is that entrepreneurial spirit, careful planning, lateral thinking and skilful management of relationships with key Chinese state and private partners can produce gains capable of shifting the dial on the performance of Scottish exports. We see this kind of internationalisation as the key to growth levels worthy of Scotland’s long tradition of global enterprise and entrepreneurship.
