IT is demoralising, although of course not at all surprising, to see further signs of weakness of business investment in Royal Bank of Scotland’s latest quarterly business monitor.
Scottish business investment has now fallen for six consecutive quarters, the survey reveals. And the monitor, produced in association with Strathclyde University’s Fraser of Allander Institute and taking in more than 400 companies, flags Scottish companies’ expectations that their overall capital expenditure will continue to decline.
Royal Bank chief economist Sebastian Burnside noted that, in contrast to falls in business investment, Scottish companies were increasing employment. Job creation is good.
However, we must not underestimate the long-term damage done to the economy, and ultimately living standards, by weak business investment, particularly in these times of rapid technological change.
Mr Burnside noted the negative impact of weak business investment on productivity.
He said: “One of the things we are looking for businesses to be able to do to improve the overall productivity in the economy is to take more risk and invest for the long term.”
Noting that artificial intelligence and automation would become increasingly important, Mr Burnside added: “That investment is going to be even more important in terms of staying ahead of our rivals.”
This point is well made. The challenges and opportunities created by the rise of automation and artificial intelligence are fairly mind-boggling, in this latest era of huge technological change.
There is much to weigh up, and act upon, in this arena, for the private sector and government.
Sadly, businesses in the UK are having to divert much of their attention to the unfolding horrors of Brexit, and how to minimise the impact of these.
The deeply divided Conservative Government is clearly well and truly focused on Brexit. Unfortunately, in spite of the huge amount of time being spent on this folly, there have been few signs of constructive moves to mitigate the economic damage or of reflection on whether this is a path the UK should be taking at all. No wonder businesses are fearful.
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