CONFIDENCE among Scottish businesses has stabilised, with the economy predicted to return to growth in the coming months. However, they want clarity on the future from politicians, according a new report.
A survey of firms for Grant Thornton’s International Business Report covering the first quarter of 2017 found that 15 per cent of Scottish business leaders are confident about trading conditions over the next 12 months.
The figure is slightly higher than for the final three months of 2016, when the proportion plummeted to 14 per cent from 36 per cent in the third quarter of last year, and 42 per cent in the second quarter. However, it still remains substantially below the eurozone and UK, at 39 per cent and 20 per cent respectively.
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An average of 50 business leaders from a wide range of sectors and company sizes throughout Scotland are questioned every quarter as part of professional services firm Grant Thornton’s global survey of more than 2600 businesses in 36 economies. The survey aims to provide a snapshot of economic conditions.
Debbie Mayor, head of international at Grant Thornton in Scotland, said: “The latest data is a fair reflection of current conditions in the Scottish marketplace. There is a sense of fatigue with the current political deadlock, but also a real resilience and commitment to continue to grow sustainably, despite the challenges that lie ahead.
“What the Scottish marketplace really needs is clarity from political leaders.
The country depends heavily on access to the single market for everything from exporting to employing skilled EU workers.
“A potential hard Brexit throws this into doubt, but a clear action plan that places collaboration and sustainability at its heart to mitigate some of the potential long-term damage.”
A separate report has found that Scotland’s private-sector economy broadly stagnated during March. The Bank of Scotland Regional Purchasing Managers’ Index produces a single-figure measure of the month-on-month change in combined manufacturing and services output.
It recorded a score of 50.1 in March, down from 51.7 in February. Manufacturing output continued to rise considerably, this was broadly offset by a modest reduction in service sector activity. Fraser Sime, regional director of Bank of Scotland commercial banking, said: “The economic upturn of Scotland’s private-sector economy lost momentum at the end of the first quarter. Muted demand for goods and services resulted in only a marginal increase in new business inflows, which in turn caused activity levels to broadly stagnate. The overall message is more balanced, however, as businesses created jobs over the month and sentiment remained broadly positive.
“These developments suggest that the Scottish economy will likely return to growth as we head into the second quarter.”
February’s Bank of Scotland Regional Purchasing Managers’ Index pointed to the fastest increase in output levels in Scotland’s private sector for 19 months. Growth was centred on Scottish manufacturers, as firms raised production at the fastest level since January 2014. New business continued to increase, albeit at a weaker pace than at the start of the year, and Sime said the upturn was driven by a strong performance in the manufacturing sector, where production increased at the fastest pace since 2014.