A leading business organisation’s latest survey of the Scottish economy has shown “far less negative results from businesses in the oil and gas sector.”
But Scottish Chambers of Commerce (SCC) say they expect the consequences of low oil prices to continue to be felt in the short to medium term.
Overall, the SCC Quarterly Economic Indicator for the third quarter of of 2016 shows, “a Scottish economy that is growing, but growing slowly.” It is the first survey the organisation has published since the EU referendum.
SCC said its findings underlined the need for lower taxes and continuing access to international talent as Scottish businesses tackled the underlying challenges facing them and prepared for Brexit.
Published today, in collaboration with Strathclyde University’s Fraser of Allander Institute the survey focuses on five key Scottish business sectors.
Neil Amner, chair of SCC’s economic advisory group, said: “We know that the Scottish economy has grown at a generally far slower pace than that of the UK as a whole since the early part of 2015 and there are a range of factors which have influenced that, including the impact of the collapse of global oil prices, which began in 2014.
“Despite the fact that we are now beginning to see far less negative results from businesses in the oil and gas sector than at any time in the last year, we expect continued consequences of low oil prices to be manifested in the short to medium term.”
Mr Amner said underlying challenges facing many businesses were around lower expectations of profitability and tightening margins which impact on their ability to invest.
He added: “This is a clear reason why our UK and Scottish governments must use the opportunity presented by the Autumn Statement and Scottish Budget to deliver a clear commitment to investing for growth and to lowering the costs of doing business.
“With the Chancellor indicating a softening of austerity, room must be created for reductions in taxes, for example, VAT to boost consumer spending or to incentivise our tourism industry, or, in the Scottish Government’s case, business rates, to tackle the core fixed costs of doing business.”
The survey shows some sectors, such as construction and tourism gaining ground over the summer. But, the retail sector remained pessimistic, with businesses reporting the weakening of sterling had led to rising costs, impacting on profit margins.
Mr Amner said a “clear positive” was that Scottish businesses were continuing to recruit and create new jobs. But he said recruitment difficulties reported across a range of sectors underlined the need for business to have access to the widest possible pool of talent.
“That is why we will oppose any plans from the UK Government to restrict access to international talent through the tightening of post study work options,” added Mr Amner
“On the contrary, the UK Government should be supporting business by guaranteeing now the right of EU citizens to remain and work in our economy.
“Brexit hasn’t happened yet and despite the fact that we seem to have avoided a short term economic shock from the EU referendum vote, there are already clear potential challenges ahead.
“We now know more detail around the timescales for Brexit but we do not know what the final outcome will look like. Whatever these outcomes may be, business cannot and will not go on hold for the next two years.”