Business Brexit fears
One in three companies say it is likely plans for recruitment will be cut back
MORE than 60 per cent of Scottish businesses have declared leaving the European Union would be bad for them, in a survey that highlights a major threat to economic growth, jobs and investment from Brexit.
The survey, published today by Strathclyde University’s highlyregarded Fraser of Allander Institute, shows 40 per cent of Scottish firms believed Brexit could lead to a reduction in their investment and expansion plans. Meanwhile, 34 per cent of the 320 Scottish businesses that responded to the survey declared it likely they could cut back on plans for recruitment.
Only 19 per cent of Scottish firms believed leaving the EU would have a positive impact on their businesses. And one-third of respondents feared the impact of Brexit on their businesses would be “very negative”.
The survey also shows more than 70 per cent of Scottish businesses have made no preparation for the UK leaving the EU.
Fraser of Allander, presenting the results of what it described as the first major post-referendum survey of Scottish companies, declared: “Following the EU referendum, the Scottish economy has now entered a period of uncertainty that threatens investment, jobs and growth.”
More than two-thirds of Scottish businesses highlighted the resolution of uncertainty as a key issue in the UK’s negotiation of its exit from the EU. Meanwhile, 49 per cent flagged “access to the single market” as a key issue.
Fraser of Allander’s survey signals some investment and recruitment plans have already been put on hold by a significant proportion of Scottish businesses in the wake of the UK electorate’s vote on June 23 to leave the EU. It shows 25 per cent of firms have already made a decision to change their investment and recruitment plans.
Fraser of Allander noted that, of these firms, 95 per cent said decisions had been postponed rather than cancelled entirely.
Professor Graeme Roy, director of the Fraser of Allander Institute, said: “This is the first hard survey evidence post-referendum of what businesses in Scotland are thinking and how they are responding to the unexpected EU referendum result.
“A clear majority believe the impact – certainly in the short to medium term – will be negative. The survey offers some evidence that investment and recruitment plans may be being put on hold.”
Mr Roy declared it was crucial for policy-makers to minimise instability arising from the Brexit vote as swiftly as possible.
He said: “Resolving the current political and economic uncertainty must now be the key priority. It is imperative policy-makers do all they can to help reduce this source of instability to allow businesses to invest and press ahead with their recruitment plans. The longer the period of uncertainty continues, the more damaging the impact will be on the economy.”
The survey was conducted between July 5 and 12.
Scottish Chambers of Commerce has this week voiced “very acute fears” the economy north of the Border could fall into recession, citing the potential impact of the Brexit vote and recent weak performance. Its latest quarterly survey, published yesterday, signals the Scottish economy was in a fragile state in the second quarter.
Scottish Chambers’ survey points to a sharp slowdown in the overall growth of services companies not involved with the oil and gas sector. Those serving the oil and gas sector continued to see activity decline.
The Bank of England yesterday held UK base rates at a record low of 0.5 per cent but signalled its Monetary Policy Committee may be minded to cut benchmark borrowing costs next month.
‘‘ The survey offers some evidence that investment and recruitment plans may be being put on hold