The Scottish Chambers of Commerce welcomes the thrust of the Scottish Government’s 2017-18 Programme for Government, and applauds its ambition “to be the inventor and the producer, not just a consumer, of the innovations that will shape the lives of our children and grandchildren.”
With the Scottish economy still fragile, the Chambers wholeheartedly concur with the First Minister’s statement to the Scottish Parliament on the need for bold measures to help our industries adapt to the future and to adopt emerging data and digital technology to make our economy more competitive, productive, innovative, fair and profitable.
We look forward to seeing the detail to support these announcements, particularly those with no timescales attached, and further clarity on key announcements including the Scottish National Investment Bank and how it will operate in reality.
Nevertheless, the Scottish Government can rely on the support of the Scottish Chambers Network in its plans to increase government investment in business R&D by 70% to generating an estimated £300M of additional R&D spending over the next three years.
Likewise, we support the investment of £9m in a new lightweight manufacturing centre in Renfrewshire to help companies develop global competitive advantage in the manufacturing of lightweight, environmentally friendly materials.
The Scottish Government has wisely recognised that scaling-up businesses requires support as well as starting them, and we look forward to working with them on the new “Unlocking Ambition” challenge, to provide intensive support for up to 40 of the most talented entrepreneurs.
On the enterprise and skills agenda, we welcome the new Strategic Board, led by Nora Senior, past-President of Scottish Chambers of Commerce, and look forward to working with the Board to improve the strategic alignment of the public and private sectors.
On business rates, Scottish Chambers of Commerce has already made clear that the requirement to deliver “revenue neutrality” has limited the benefits of the Barclay Review’s reforms, and we note the critical role the Scottish Government has in matching the business momentum for change.
Finally on the circular economy, we would like to see more consultation with business on the proposals to design and introduce a deposit return scheme for drinks containers, to ensure that the scheme can be effective in achieving its aims without imposing extra costs on businesses and consumers. We would hope that no scheme will be implemented without the full buy-in of retailers.
Commenting on the news that Scottish employment rose by 30,000 (1.1%) and unemployment fell by 12,000 (0.5%) in the three months to June, Liz Cameron, Chief Executive, Scottish Chambers of Commerce, said:
“The overall employment figures remain strong, with a new record high employment rate of 75.2% and an unemployment rate of 3.9%. At a time of heightened political and economic uncertainty, the labour market figures are encouraging, showing the commitment and resilience of business to hire and invest in their workforce.
“Although the overall employment rate of 75.2% is the highest since Scottish records began, there are some continued challenges. Strong labour market figures are still not translating into increased productivity or the sort of wage growth that we would normally be seeing with fewer people out of work. This persistent lack of increased productivity and wage growth will add further pressure on consumer demand, business margins and future business investment.
“Additionally, Scotland’s economic inactivity rate remains unchanged from the same period last year, adding further impetus to business and Government to invest in training and upskilling opportunities as a way of encouraging individuals to re-join the workforce. It also reinforces the need for Scottish business to have continued access to a skilled workforce from the EU and beyond as negotiations take shape between the UK and the European Union.”
Scottish Chambers of Commerce’s Quarterly Economic Indicator engages with five of Scotland’s key business sectors: Construction, Financial and Business Services, Manufacturing, Retail & Wholesale, and Tourism.
These findings, released in collaboration with the University of Strathclyde’s Fraser of Allander Institute show the position of businesses for the second quarter of 2017. The results from our latest comprehensive survey of businesses in Scotland reveals a broadly positive story in terms of business performance across most sectors but accompanied by some stark warnings about the potential challenges ahead.
Neil Amner of Anderson Strathern, Chair of the Scottish Chambers of Commerce Economic Advisory Group, said:
“Performance in the construction sector has improved since the beginning of the year, but concerns remain about the persistent negative trend in contracts from the public sector. Manufacturing businesses have again reported strong results, with evidence of a sharp increase in export revenues, possibly as a result of the exchange rate. The tourism sector is also looking well set for the summer, whilst key indicators in the financial and business services sector, such as profitability and employment have returned to their best levels for over two years.
“These are all positive signs in line with other recent surveys and data. They indicate that the Scottish economy will continue to grow this year. Businesses are, however, also highlighting longer term threats to success from factors such as falling real incomes and rising recruitment problems. The retail sector is perhaps most exposed to pressures on household budgets. It is therefore worrying that almost half of retail respondents are reporting a fall in revenues and profits. Supply chain price rise pressures will compound that issue. Consumer demand drives around three quarters of Scotland’s economic growth, so unless the recent falls in real earnings are reversed, there is a risk that the impact could spread to the wider economy.
“There is also evidence that the low unemployment rate may be impacting on businesses’ ability to recruit the talent they need. Recruitment difficulties are growing across almost all sectors of the economy and we are seeing businesses increase their investment in staff training, possibly to improve the skills of existing staff or to bring new recruits up to speed, who may not have all the skills that the business needs.
“Those recruitment pressures, underline the need for early agreement on the rights of existing EU workers to live and work in the UK and for the UK’s future migration policy to be driven by business need. We are continuing to hear anecdotal evidence from businesses of a slow but steady drift of EU workers out of the UK. For Scotland, that has to stop if our current recruitment problems are to be reversed.
Although the survey results are positive overall, they are not wildly so. Corporate training investments are being made in the context of tight margins and uncertain times, exposing the punitive nature of the Scottish operation of the Apprenticeship Levy for those paying it. It is time for Governments at all levels to begin planning for the kind of country we want Scotland to be, and investing in assets like world leading digital connectivity to help businesses to grow, rather than placing further cost pressures in the way of growth.”
Scottish Chambers of Commerce believe that June’s fall in CPI inflation from 2.9% to 2.6% will ease pressure for an early increase in interest rates.
Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“June’s fall in inflation is significant, although much of the downward pressure came from a fall in fuel prices this year compared to an increase at the same time last year. Staples such as food and household goods continue to increase and expectation remain that inflation will continue to rise above the target rate of 2% for some time to come.
“Nonetheless, it should ease some of the growing pressure from the Bank of England’s Monetary Policy Committee for an early rise in interest rates. The Bank took decisive action to lower rates to rock bottom following last year’s EU referendum result, and businesses welcome the stimulus that this has brought to the economy. Interest rates will eventually have to go back up again, but the risks to our economy of doing so at a time of fragile growth are substantial.
“Next month’s Bank of England Inflation Report will be eagerly awaited in terms of how these latest figures will factor in to future prospects, with inflation expected to peak at or around 3% before falling back. A steady hand on interest rates coupled with determined government action to mitigate business costs will be key to medium term economic prospects.”
Scottish Chambers of Commerce have welcomed the news that Scotland’s unemployment level has fallen by 19,000 in the three months to May 2017, resulting in an unemployment rate of just 3.8%.
However, there are fewer people in employment and more people economically inactive in Scotland than there were a year ago, highlighting the continuing challenges facing the Scottish economy. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“It is extremely welcome that Scotland’s unemployment rate has fallen to just 3.8% in the three months to May. Whilst this is an outstanding achievement and compares very favourably to the rate of 4.5% across the UK as a whole, it is worth taking a look at some of the numbers behind the headline figure.
“Compared to this time last year, there are now 6,000 fewer people in employment in Scotland; whilst 65,000 more people are economically inactive. These numbers highlight the continuing challenge facing the Scottish economy at a time when businesses are seeking staff with the right skills to help them to succeed and grow.
“Uncertainties remain over the position of EU workers in businesses right across Scotland, and many businesses continue to report skills shortages and difficulties in being able to find the talents they need to bring to their workforce. That is why government must continue to focus on providing support for upskilling and reskilling people who are unemployed or in work, because Scottish business cannot afford to have rising economic inactivity.
“As Scotland seeks to internationalise our trade, we need skills in the likes of ecommerce, yet there is no formal university degree in this discipline, nor is there yet a government strategy that comprehends and embraces it.”
A new survey conducted across the UK by the British Chambers of Commerce has highlighted business’s need for stability in terms of our trading relationship with the EU, regardless of the state of negotiations at the time of the UK’s exit from the EU in March 2019.
Key survey findings include:
• 68% of Scottish and UK respondents believed that there should be a transition period of at least 3 years following the UK’s exit from the EU on 29 March 2019
• 61% of Scottish respondents felt that the UK should remain in both the single market and the Customs Union, compared to 53% of respondents across the UK
Commenting, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“Scottish businesses value our trading links with the European Union, as they do with our other major trading partners, and this survey shows that businesses are serious about maintaining a relationship with Europe that continues to enable them to trade as easily as possible, with no financial tariffs and an absolute minimum of regulatory barriers. The EU may have fallen behind the rest of the world in terms of the value of Scotland’s exports but it remains a vital export destination, particularly as Scotland seeks to grow the number of businesses trading internationally.
“This survey also clearly shows that Scottish businesses do not want to be facing a cliff edge in two years’ time when the UK will leave the EU under Article 50 of the Lisbon Treaty. The vast majority of business people who responded to this survey felt that a transitional period of at least three years would be appropriate in order to allow trade to continue as normal until a deal is struck to govern our future trading relationship with the EU.
“If Scotland and the UK’s economic needs are to be satisfied, then business must be listened to during these crucial negotiations.”
Commenting on the First Minister’s statement in the Scottish Parliament this afternoon, Liz Cameron OBE, Director and Chief Executive of Scottish Chambers of Commerce, said:
“The business community is looking for stability and certainty from the Scottish and UK Governments, and a commitment to focus on the priorities for business and our economy. The First Minister’s new plan will enable an opportunity for Scotland’s politicians of all parties to focus on two clear objectives – to ensure that Scotland and the UK get the best deal possible from Brexit, and for the Scottish Parliament to deliver the improvements to skills, taxation, infrastructure and connectivity that we need here in Scotland.
“We support the First Minister’s call for the Scottish Government to play a full and integral role in the Brexit negotiations, and we also want to see wider Scottish interests, including our business community, represented in this.
“We don’t yet know what Brexit will look like, and our understanding of the terms of the final agreement will define the business and public response. At that point, there will no doubt be a time of public reflection in Scotland, and indeed throughout the UK, to consider the way forward.”
Scottish Chambers of Commerce has welcomed the additional clarity provided by the Prime Minister around the UK Government’s proposals on the rights of EU nationals to remain in the UK.
Commenting, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“EU nationals play a vital role in Scottish business and in the Scottish economy, and our businesses have long called for clarity on the status of EU nationals in the workforce in the wake of the vote for the UK to leave the European Union. That is why the Scottish Chambers of Commerce network called for a deal on the rights of EU citizens in the UK, and UK citizens in the EU, within the first 100 days of this Government
“We therefore welcome the additional clarity provided by the Prime Minister on the UK Government’s offer to the EU in respect of EU nationals. It demonstrates a clear intention to secure the futures of those EU citizens who are already living and working in the UK, whilst providing a path for those arriving or yet to arrive in the UK. It will now be vital for politicians in the UK and the EU to hammer out a deal on this as soon as possible in order to give business the confidence that their colleagues and staff’s futures are secure.
“However, this also serves to underline the need for a plan on the UK’s future system of migration. Artificial and arbitrary limits for future migration will not work for business and we require an assurance that future migration targets will reflect the sectoral and geographical needs of business and the economy for skilled talent.”
Commenting on the Prime Minister’s announcement on the future work and residency rights of EU citizens in the UK, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“Scottish Chambers of Commerce Network called for the guarantee of EU citizens from the outset and it is good news to see the Prime Minister finally guarantee these rights and provide clarity to Scottish business. This news will be welcomed by all sectors and will enable us to plan ahead, whilst also providing a level of stability to EU citizens and their families. These are the initial building blocks that need to be put in place and now we must look towards a longer-term solution in terms of migration to the UK that is firmly based on business and economic need.
“We would also urge reciprocity from our EU counterparts to guarantee the rights of the 1.2 million UK citizens currently working or living in the EU, ensuring those businesses that are trading within the EU market can continue to grow and run their business operations.
“This announcement is a good start to the Brexit negotiations but there is still a long way to go to address business priorities on issues such as access to single market, tariffs and our relationship with the EU bloc.”
Scottish Chambers of Commerce has welcomed today’s publication of the second phase report of the Scottish Government’s Enterprise and Skills Review.
However, it has called for close scrutiny of the new agency structure’s achievements over the coming years to ensure quick and effective progress. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“The Scottish Chambers of Commerce network welcomes the publication of the Scottish Government’s Phase 2 report on its Enterprise and Skills Review. It is vital that the services that businesses receive from Scotland’s public sector are constantly evolving to meet their needs and to help business, and our economy, to grow.
“At a time when the Scottish economy is significantly underperforming that of the UK as a whole, this review has been timely, and this latest set of actions give us much more detail about how the new proposed structure will interface with businesses in practice.
“We welcome the creation of a South of Scotland Enterprise Agency, focused on the particular opportunities, challenges and needs of businesses in Dumfries & Galloway and in the Scottish Borders. We also welcome the strong role envisioned for the Scottish Chambers of Commerce network in terms of building the exporting potential of Scotland’s businesses – which will be an even stronger priority in the post-Brexit landscape.
“What we need to see now is exactly how the private sector can have a role to provide the leadership and guidance necessary to make these new structures work. The new framework must deliver real change for the better in a very short timescale and this must be monitored on a regular basis to ensure that there is material progress in supporting Scotland’s businesses and growing our economy.”
