The latest Scottish Chambers of Commerce’s Quarterly Economic Indicator survey shows Scottish firms continuing to display resilience in the face of economic uncertainty.

The survey, produced by the Scottish Chambers of Commerce Network in collaboration with the University of Strathclyde’s Fraser of Allander Institute, found growing optimism within manufacturing and financial & business services firms.  However, concerns around investment levels and recruitment challenges suggest that growth may remain fragile in the months ahead.

In a positive development, the retail sector has displayed some evidence of an encouraging fourth quarter, with key financial indicators such as sales and cash flow reported as improved over Q3 2017.  However, this follows a particularly challenging number of years for the sector, and it should be noted that these improvements are coming from a particularly low base relative to our other surveyed sectors.

Reacting to the results, Neil Amner of Anderson Strathern, Chair of the Scottish Chambers of Commerce Economic Advisory Group, said:

“The results of the fourth quarter Quarterly Economic Indicator are broadly positive, and suggest that Scottish businesses are continuing to display positivity in an uncertain economic environment.   

“Firms remain concerned about a range of issues however, with over 87% of manufacturers anxious around the rising costs of raw materials and its effect on their prices. 

“Further, the fact that over half of Tourism respondents indicating business rates as their primary concern, in addition to 40% of Business Services firms citing taxation, suggests that the debate on Income Tax and the wider tax mix in Scotland will continue to be of interest beyond the Scottish budget’s parliamentary approval process.

“Recruitment difficulties have continued to worsen for a number of sectors, particularly manufacturing, tourism and financial and business services, with the latter two sectors close to the highest levels ever measured in the survey.

“Many sectors are continuing to invest in training in an attempt to retain and upskill their existing staff, but it is clear that businesses are finding it challenging to fill vacancies.  This continues to emphasise the need for Government to continue investing in our talent and skills base through initiatives including Developing the Young Workforce and Foundation Apprenticeships. In addition the need for a practical immigration policy to arise from the Brexit negotiations, which puts business first, is made even more critical by these conditions.”

In his foreword to the report, Professor Graeme Roy of the Fraser of Allander Institute comments on the challenges facing Scottish businesses:

With heightened levels of uncertainty, it is unsurprising that investment intentions remain modest, whilst the tight labour market means that many firms continue to report difficulties in recruiting staff. Encouragingly training investment is holding up a little better.”

 

KEY FINDINGS:

General / Overall

  • Raw material prices a significant concern
  • Inflation feeding in to price rises / cost pressures
  • Expectations and overall investment slowing in some sectors, suggesting rising uncertainty.
  • Recruitment difficulties persist at record highs for a number of sectors, with training investment maintained at above trend levels.

Construction

  • Optimism eased, however this is common in the 4th Quarter.
  • Orders and sales relatively strong in comparison with Q3 2017.
  • Raw materials an issue for 75% of firms, with evidence of pressure on margins with reduced profits.

Financial and Business Services

  • Optimism, profits, sales and expectations all strong.
  • Signs of easing investment.
  • Highest level of recruitment difficulties ever recorded for this sector (47% of businesses).
  • Taxation highlighted as the main concern by 41% of firms.

Manufacturing

  • Trends in new orders have eased, but remain positive.
  • Firms appear to be adjusting expectations downwards, which is a slight cause for concern.
  • Capital investment negative for the first time in a number of years, although investment intent high for next quarter.
  • 87% of manufacturers are concerned about raw material prices, with a net % balance of 68% indicating that they will raise prices in Q1 2018.

Retail

  • Strong Q4 with more positive results than much of 2017.
  • Cashflow and Profit returned to positive levels for first time this year.
  • Employment increase, but expectation that this is mainly seasonal.
  • Caveat that retail has experienced a sustained period of change / challenging conditions for a number of years, so although Q4 may have surpassed expectations, remains to be seen if this positivity will persist in 2018.

Tourism

  • More negative set of results that outlined in prior Q4s, even taking into account that Q4 is generally negative for tourism.
  • Significant rise in training investment, perhaps driven by recruitment difficulties.
  • Business Rates the main concern for 57% of respondents.

L to R Carolyn Currie, Liz Cameron OBE, Jeanette Forbes, Marie Macklin C...‘Women’s Business Mentoring’ launches nationwide today (1st June 2017) with some of the most recognisable and successful Scottish businesswomen leading the way.

This initiative brings together the connectivity and entrepreneurial spirit of the Scottish Chambers of Commerce Network, Women’s Enterprise Scotland and Scotland’s leading women entrepreneurs: Liz Cameron OBE of Scottish Chambers of Commerce, Carolyn Currie of Women’s Enterprise Scotland, Jeanette Forbes of PCL Group, Poonam Gupta OBE of PG Paper, Marie Macklin CBE of Macklin Partnerships and Petra Wetzel of WEST Brewery.

‘Women’s Business Mentoring’ will match mentors with mentees to create a self-supporting, collaborative community who understand the specific challenges faced by women in business, whether it is accessing finance, overcoming gender bias or managing family responsibilities alongside a business. A dedicated website will help prospective businesses find a mentor, attend events and access key resources. In addition, women in business can also sign up as mentors: www.womensbusinessmentoring.com

Commenting on the launch of Women’s Business Mentoring:

Carolyn Currie, Chief Operating Officer, Women’s Enterprise Scotland, said:

“Research shows that women seek out business advice in the form of mentoring and coaching rather than on a consultancy basis and we know there is a clear need for more business women as mentors, since mixed-sex mentoring relationships may not always be of benefit for everyone. Only 20% of Scottish SME’s are majority-led by women, yet we know that if women started businesses at the same rate as men, this would contribute an additional £7.6bn to Scotland’s economy. I am honoured to play a part in this inspiring initiative and I look forward to collaborating and creating a lasting impact for women in business.”

Liz Cameron OBE, Director & Chief Executive of Scottish Chambers of Commerce, said:

“Our approach is innovative and fresh and is all about tapping into the talents and experience of successful women entrepreneurs and matching them with ambitious, driven and aspiring women in business. I am delighted to have Scotland’s most recognisable and talented business women on board, which reflects the strength of female talent in Scotland, but also our commitment to give back to Scotland, grow our economy and contribute to our local communities.”

Petra Wetzel, Entrepreneur & Chief Executive of West Brewery said:

“Anything that can connect women in business and enable growth in their business is good for Scotland and good for the economy. From my experience, having a Mentor in any aspect of your life can add immense value to personal development. I view mentoring as a valuable asset which can bring a wealth of knowledge, experience and insight to a business. I look forward to personally mentoring aspiring women in business and giving back to the business community.”

Poonam Gupta OBE, Chief Executive of PG Paper and recipient of Entrepreneur of the Year Award at the Scottish SME Business Awards, said:

“Mentoring is all about collaboration, unlocking ideas and talents that an add value to your business and to your life. For many women in business, these talents and ideas can often be overlooked, holding them back and preventing contributions to our economy. That’s why this campaign is so appealing. It’s led by women in business and is for women in business. I have seen first-hand how a business mentor can bring new perspectives, new solutions and new techniques to overcoming challenges and enabling success, and I look forward to doing exactly that with Scotland’s next generation of women in business.”

On a warm day in May, a group of around thirty (mostly) women joined us at the G&V Royal Mile Hotel for our monthly Inspiring Women in Business Lunch. Our guest speaker was Tracey McNellan, a woman boasting an illustrious career in the fast-paced media industry.

From early on in the event, delegates relaxed in to the comfortable surrounds of the G&V, drink in hand, where they were given the opportunity to network prior to being whisked in to the dining room to hear from our guest speaker.

In something of a break from the norm, this Inspiring Women in Business event was held Q&A style with one of Tracey’s colleagues – Paul Harper of Heart Scotland’s drive time show – quizzing Tracey on a range of topics, from her early career to challenges she’s faced to radio’s place in today’s world. Paul informed the crowd that the last Q&A he hosted was with the lawyers of Steven Avery, the man made famous by the documentary Making a Murderer. This Q&A, he assured, would be much more light-hearted.

They covered Tracey’s career first, noting her background in computing and early love of music, which undoubtedly influenced the direction her life would later take. We learned of Tracey’s determined nature from an early age, where when she told her mother about her intentions to take on a sales role and being told she didn’t have enough experience in sales, she replied with a straightforward; “I’ll learn”. They spoke of her rapid career progression, winning the roles of Sales Manager at only 25 and Sales Director at 29, and her philosophy that – to counter those who believed she was too young for such a senior role – “if you’re capable enough, you’re old enough”.

Radio and the wider media industry are seen as ever-exciting and fun places to work, yet like most businesses they don’t come without their challenges. We heard next of some of the obstacles Tracey has faced in her many roles (and in her personal life, too). She spoke of her earlier marriage, the changes she has seen her workplaces undertake as the media industry has evolved, and her conflict of choosing between her career and her personal life – notably, a career move that would see her move to Nottingham for the role of Managing Director at Capital FM East Midlands, at the cost of leaving behind a life she loved in Scotland.

Tracey couldn’t stay South forever though, and eventually moved back to Scotland for the role of Managing Director at Global Scotland (Heart & Smooth), where even today she and her team face challenges that many radio stations face in a world of constant and rapid technological and societal change. She believes that radio must continue to “evolve and change rapidly”, and that in this time of ‘fake news’ radio must hold on to it’s status as an instant, yet trusted source of information.

We heard a little of Tracey’s life outside of work, too. While she admits that it can be difficult to ‘switch off’, she enjoys coaching other businesses and, while in Nottingham, took up a side project of becoming a yoga and pilates teacher.

Tracey then talked us through a typical day – well, as typical as one could be, given that “no two days are the same, because it’s radio [and] things happen, and we need to react”. That concluded the Q&A, and after applause, lunch arrived. The staff at G&V promptly delivered our plates, a delicious pork belly, followed by a dessert of honeycomb and ice cream, and tea and coffee.

During dessert, there was the opportunity for delegates to ask any burning questions – after which Tracey and Paul had to take their leave. Paul was due to host the drive time show in only a couple hours time and while we were enjoying their company, as Liz McAreavey said, “we’d rather not be responsible for silence on the air this afternoon”.

Our next Inspiring Women in Business Lunch will be held on June 27th at the Waldorf Astoria, where we will hear from Catherine Topley, Director of Corporate Services at Scottish Prison Service. Click here to book your place.

Today’s news that inflation has jumped to 2.7% has confirmed long-held expectations and highlighted growing concerns over the capacity for businesses to contain rising costs and the potential threat to consumer demand, as disposable incomes become squeezed. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“Whilst part of the reason for this latest increase in inflation might be due to the timing of Easter and the consequent impact on the cost of flying, the fact remains that there are continued upward pressures on prices from a range of sources and the Bank of England last week said that it expected inflation to continue upwards to almost 3% later in the year.

“The impact on Scottish business and the Scottish economy is two-fold. Rising prices impact on businesses’ costs and their ability to invest and create jobs, whilst weakening real incomes could depress consumer spending, which has been the strongest driver of economic growth in Scotland over the past few years.

“These challenges, coupled with ongoing political uncertainty represent a risk for the Scottish economy, which our politicians must respond to. With a General Election campaign in full swing, politicians of all parties must remember that it is Scotland’s businesses that are the creators of jobs, wealth and growth in our economy, and businesses will be examining the various Parties’ plans to address this situation with keen interest.”

New alliances created with key developing cities in China as part of trade visit

Scottish Chambers of Commerce (SCC) has announced the official opening of a new International Trade Office in the city of Yantai, China, as part of a trade mission by a Chambers’ delegation to explore new trading opportunities and links with business, education and government organisations.

The formal opening ceremony was hosted by the Vice Mayor Madame Zhang Bo, together with senior officials from Yantai Municipal Government. Both parties signed a Memorandum of Understanding for trade engagement and partnership, designed to achieve an effective channel for exchange of business between Scotland and Yantai.

The Scottish delegation, led by SCC’s new President, Tim Allan and CEO Liz Cameron, comprised Presidents and CEOs from Chambers throughout Scotland: Aberdeen, Ayrshire, Dundee & Angus, Glasgow, Edinburgh and West Lothian. They were accompanied by senior business executives, including entrepreneur David Valentine of Valentine International, and former SCC Chair Nora Senior, UK Chair of international PR company Weber Shandwick, who have had a presence working in China for over 25 years.

During the trade visit, which was six months in the planning, SCC held a series of productive meetings with senior business people, highly influential politicians and local government officials including Vice Governor Wang Shujian, as well as national ‘think tanks’ bodies in Beijing, Yantai and Jinan in the Shandong Province

President Tim Allan commented: “The Chinese economy continues to grow at a faster pace than western economies and the rate of growth within new cities such as Yantai and Jinan opens up the potential for Scottish businesses to promote and sell goods and services which Chinese businesses Chinese businesses and consumers want and need. That demand, together with a more recent policy of ‘opening up’ to new trading partners and overseas alliances by the Chinese, presents a myriad of opportunities for Scottish businesses to capitalise on.

“The aim of our mission was to strengthen relationships and increase engagement with existing and new contacts in sectors where there are direct B2B or knowledge-share opportunities for Scottish companies. Yantai is a city of 7 million and SCC’s base in Yantai will enable us to plan a comprehensive approach to exploiting the many opportunities in Yantai and further afield.”

Shandong Province represents the third largest economy in China with a population of over 97 million and a GDP in excess of 6.3 trillion yuan (£0.7 trillion). It is China’s best wine growing region accounting for over 25% of all wine production. Yantai is the biggest trading port in North China and in 2016, the city imported over $19 billion (£14.7 billion) of goods and services.

The city of Jinan is home to one of the first national high-tech business incubators and since its foundation in 2002, it has incubated more than 1,000 small and medium sized science and technology enterprises. It focuses on cultivating fast-growing sectors such as biomedicine, ecommerce, energy, environmental protection and new materials.

Key sectors for Scottish interest to meet key economic needs in the Chinese target cities include: electronic information, robotics and artificial intelligence, pharmaceutical, bioscience, R &D, manufacturing, engineering and smart technologies, energy including upstream and downstream products and services, logistics, agriculture, food and drink, and indeed football management.

The accelerated growth of consumers in Shandong province also opens opportunities in consumer goods, recreation and tourism services, financial and professional services and education.

Chief Executive, SCC, Liz Cameron OBE said: “This exploratory visit is part of the new partnership which was formed between Scottish business, through our extensive Chamber network, and the Scottish Government to utilise the world-wide connectivity of the business community. We now have a deeper understanding of how we can achieve the best exchange for business, where the opportunities exist for Scottish organisations and how we can best pursue these.

“We have also identified several potential opportunities for inward investment into Scotland and will be working with Scottish Government and SDI as well as other trade organisations to explore these and leverage the momentum of change within China.

“Our next steps will be to undertake a deep dive of companies based in Scotland who have products, skills and expertise which have the potential to be exported to the Shandong Province area. Our aim is to add impetus to the Scottish economy by assisting companies who have not previously thought about exporting to grasp the potential that international trade offers.

“The new more open trading environment in fast growing cities such as Yantai, Jinan and the wider Shandong Province, together with the practical advice and direct B2B links Chambers now have within this market, will facilitate more effective trading partnership opportunities for Scottish businesses and educational institutions.”

SCC intends to return to Shandong Province later this year to conclude discussions on further Memorandums of Understanding and explore new ways to foster co-operation between the two countries.

Chambers in Scotland have already led trade missions to Italy, Iceland, Iran, Germany and the US, with further country visits planned this year to a number of key destinations.

The Bank of England is expecting three further years of above-target inflation in the UK, whilst GDP growth projections this year are down marginally this year to 1.9% but up slightly to 1.7% and 1.8% in each of the next two years.

Commenting, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“There are twin challenges facing our economy at the moment in the shape of rising prices resulting from the fall in the value of sterling and weak consumer demand due to low real income growth, putting upward pressure on inflation and downward pressure on economic growth respectively. In addition, many businesses are experiencing a rise in their costs, putting upward pressure on prices and threatening their capacity to boost investment.

“We will be looking for next month’s General Election, whatever its outcome, to deliver greater clarity and stability. The next UK Government must act quickly to set out its agenda for Brexit, enhancing market confidence, and taking early action to tackle core business costs. Targeted tax reductions could play a key role here and help provide the boost that would stimulate improved levels of investment and new employment opportunities.”

Commenting on the trade statistics for March 2017, released today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

“The sharp deterioration in the UK’s net trade position means that trade is likely to have been a drag on UK growth in the first quarter of the year, following a strong performance in the previous quarter. This deterioration reflects a sharp rise in imports in the quarter, and a slight fall in exports.

“While many exporters are benefiting from improving growth outlooks in key trading markets, and the weaker pound is helping to make them more price competitive, our Quarterly Economic Survey shows businesses under pressure from the rising costs of raw materials. The widening in the UK’s trade deficit, and weakening output from the industrial and construction sectors, is further evidence that we are still a long way from achieving a rebalancing of our economy.

“As the UK moves through the Brexit process and beyond, it is vital that more is done to provide greater practical assistance for exporters, including developing an expanded trade mission and fairs programme and funding front-line, face-to-face support for exporters to help get UK businesses trading with the world.”

A new UK Government will herald new opportunities for it to work more closely and effectively with Scotland’s businesses; and Scottish Chambers of Commerce has called for a renewed role for the Scotland Office in generating new partnerships to help grow Scotland’s economy. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“While an unexpected General Election adds further to the compounded uncertainty generated by recent elections and referendums, it also presents an opportunity for the next UK Government to take a fresh look at its strategy, and in particular how it engages with Scotland’s businesses. The UK Government has a key role to play in supporting Scottish firms to grow and to take advantage of the opportunities that the UK’s changing international relationships will bring.

“That is why the UK Government in Scotland must become as open and accessible as the Scottish Government already is. The Scotland Office must transform its perception and its operation in order to become a functional hub for UK Government services in Scotland, fully aligned and in tune with Scottish business needs. As part of this, the new Department for International Trade must formulate a new partnership with Scottish business that will help to encourage more of our businesses to export and which will harness the international connectivity of the UK Government alongside the deep-rooted business to business links that organisations such as Chambers of Commerce can bring to the table.

“Whatever the composition of the new UK Government following next month’s elections, there will be a clear opportunity for it to deliver closer connections with Scotland’s businesses, to reinvent the nature of its activity in Scotland and to play a key role alongside the Scottish Government in working to build on the huge potential for success across Scottish business; in particular, helping our small and medium sized businesses to succeed in exporting.”