SCOTTISH manufacturers suffered tumbling sales and orders in the latest quarter, and cut staffing amid the “tortuous” progress of the Brexit process, a survey reveals today.
Manufacturers’ export orders fell in the third quarter, and their confidence plunged, according to the survey produced by Scottish Chambers of Commerce in collaboration with the University of Strathclyde’s Fraser of Allander Institute. And manufacturers expect further falls in sales revenues and investment this quarter.
READ MORE: Ian McConnell: BMW talks reality as Johnson camp veil slips to reveal truth of Brexit
The Scottish construction sector signalled its first drop in work-in-progress in six years, as its sales growth slowed sharply.
Prime Minister Boris Johnson has pledged the UK will leave the European Union by October 31, “no matter what”.
Professor Graeme Roy, director of the Fraser of Allander Institute, said of the survey findings: “Scottish businesses appear to be treading water as they await clarity on the terms of the UK’s exit from the EU.”
And he warned: “A ‘no-deal’ Brexit remains the greatest immediate risk to the Scottish economy. It is misguided to argue that no-deal is better than further delay. A ‘no-deal’ would not only act as a major economic shock but will do little to curb uncertainty, with the UK’s future relationship with the EU still needing resolved.”
READ MORE: Ian McConnell: Boris Johnson acts the goat on Brexit as the grim cost keeps on rising
However, he added that “not all of the recent challenges in the Scottish economy can be blamed on Brexit”.
The Scottish manufacturing and construction sectors both signalled reduced investment during the third quarter.
The tourism sector, which reported slower growth, highlighted difficulties in recruiting staff.
This sector is heavily dependent on workers from other EU countries. Net immigration from other EU nations to the UK has tumbled in the wake of the Leave vote in summer 2016, official figures have shown.
Companies in the Scottish retail and wholesale sector also flagged recruitment difficulties.
READ MORE: Ian McConnell: No escape from Johnson’s dire Brexit farce in Paris metro and airport
Tim Allan, president of Scottish Chambers, said: “Our research shows that overall business performance has declined in the last year as companies take on board extra uncertainties caused by the tortuous progress of the Brexit process.”
He observed that the challenges faced by businesses were “laid bare” in the survey.
Mr Allan said: “As the UK faces yet another deadline in the Brexit process, construction and manufacturing have reported severe challenges in terms of future orders, exports and investment. Meanwhile companies in sectors including retail and tourism face continued challenges in recruiting people with the right skills as the number of available workers from Europe continues to decline.”
He added: “We continue to affirm the view that a disorderly, no-deal departure from [the] EU will have painful, long-lasting consequences for the economy in Scotland and the UK.”
Scotland’s financial and business services sector achieved an acceleration in growth of sales revenue in the third quarter. Firms in this sector also reported an overall rise in optimism, investment and employment, although around 40% of firms in this sector that were in hiring mode reported recruitment difficulties.
Mr Roy said: “Overall, activity appears to be broadly flat over Q3 in most sectors. The one exception is in manufacturing, which continues to be buffeted by ongoing Brexit uncertainty and the slowdown in the global economy.”
Scottish Government data last month showed the economy north of the Border contracted by 0.3% during the second quarter.
However, in the context of the survey findings, Mr Roy expressed his expectation that the Scottish economy would escape recession.
He said: “The data suggests that Scotland should avoid a ‘technical recession’ – defined as two consecutive quarters of negative growth – when the next set of official figures are released later on this year.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel