THE effects of Brexit continue to figure very prominently in the economic tea leaves, and the emerging picture remains most unpalatable.

Scottish Chambers of Commerce’s latest quarterly survey this week highlights recruitment difficulties across most sectors. These difficulties are occurring at a time when employment in Scotland and in the UK as a whole is around record highs, according to official data.

At such times of high employment, even if the labour market figures probably do reflect plenty of under-employment given the stigma attached to welfare by the Conservative Government, it is more important than ever for businesses and the economy as a whole that there is the deepest possible pool of workers. As recent decades have shown, workers from other European Union countries are a crucial part of this mix.

The problem is that last year’s Brexit vote has, entirely understandably, made the UK far

less attractive to workers from elsewhere in the EU. Many of these people who are already here will be inclined to leave the UK, given

huge uncertainty over their future status here. And many from other countries in the bloc who are considering migration will prefer the certainty of a move to a continuing EU member state.

Neil Amner of law firm Anderson Strathern, who chairs Scottish Chambers’ economic advisory group, warns: “For many of our industries, recruitment difficulties continue to sit above the long-term trend levels, exacerbated by the record high employment figures. Concerns continue to be raised by our members when it comes to seasonal workers and the attractiveness of the UK to EEA (European Economic Area) migrants during the uncertainty surrounding the Brexit negotiation process.”

Scottish Chambers’ survey, conducted in conjunction with Strathclyde University’s Fraser of Allander Institute, is not the only one this week to highlight the skills and labour shortages that threaten the economy north of the Border, and the UK as a whole.

Recruitment difficulties for small and medium-sized construction companies across the UK were underlined by a survey from the Federation of Master Builders, with 61 per cent of such firms struggling to hire carpenters and joiners, and 49 per cent finding it difficult to engage site managers.

The survey also highlighted the inflationary pressures fuelled by the Brexit vote’s depressing impact on the pound, with 82 per cent of small and medium-sized building firms across the UK believing material prices will rise over the next six months.

Graeme Roy, director of Fraser of Allander, highlights the dampening impact on the economy of recruitment difficulties.

Mr Roy says: “Employment in Scotland continues to remain

around its record high and this is increasingly leading to recruitment difficulties across most sectors. If firms do not have the right staff working in the correct roles, this can dampen growth and/or increase costs.”

He adds: “In such uncertain times, it is even more important that businesses focus on the long-term drivers of growth that they can control – including innovation, investing in productivity improvements, and developing the skills of their workforce.”

What Mr Roy advocates is entirely sensible. The UK Government’s utterly inept approach to the Brexit negotiations, following former prime minister David Cameron’s extremely ill-judged decision to have a referendum in the first place, looks certain to ensure the uncertainty will remain protracted.

And one huge problem is that such uncertainty will hardly put businesses in the mood for investing.

Their diminished appetites for investing were highlighted again

this week in the latest quarterly Scottish industrial trends survey from the Confederation of British Industry.

This survey revealed plans for sharp cuts in investment by Scottish manufacturers over the next 12 months in buildings, plant and machinery, product and process innovation, and training and retraining.

Subtracting the percentage of respondents planning a rise in investment in product and process innovation over the next 12 months from that budgeting for a reduction, a balance of 17 per cent projected a decline in such spending.

A net 11 per cent of Scottish manufacturers plan to cut investment in plant and machinery on a 12-month view. And a balance of 21 per cent plan to reduce investment in training and retraining.

None of these findings bode well in terms of delivering improved productivity. That said, firms can hardly be blamed for tightening their purse strings in the current climate of great political and economic uncertainty.

There were some short-term benefits arising from sterling’s post-Brexit vote woes evident in this week’s surveys.

Scottish Chambers’ survey showed a boost to tourism from the weak pound. Sterling’s woes make Scotland and the rest of the UK cheaper for overseas visitors.

And the CBI survey indicated continuing solid growth in new export orders for Scottish manufacturers.

However, this export boost was cold comfort in the broader context of overall declines in employment, new domestic orders, and output volumes in the Scottish manufacturing sector in the three months to October.

And the short-term lifts from sterling’s weakness pale into insignificance relative to the huge problems caused specifically by the pound’s woes and, more broadly, by the Brexit fiasco.

As well as the looming and in some cases ongoing skills and labour crisis triggered by Brexit across a raft of sectors of the Scottish economy, and weak business investment arising from fears over the future, the squeeze on household incomes is hampering growth severely.

Scottish Chambers’ survey showed the renewed fall in real wages recorded in official figures, resulting from the surge in inflation caused largely by sterling weakness following the Brexit vote and weak nominal pay rises from companies amid the attendant uncertainty, is weighing heavily on the retail sector.

The combination of economic weakness and high inflation is also presenting a challenge for the Bank of England’s Monetary Policy Committee, which faces a difficult decision next week on whether

to raise UK base rates from their record low of 0.25 per cent, or hold them.

As the Brexit shambles continues, with economists polled by Reuters believing the probability of a

no-deal scenario has risen to 30 per cent, little is clear. But what is glaringly obvious is that the longer the fiasco continues, the worse

things are getting on the economic front.