New survey by Scottish Chambers of Commerce and the Fraser of Allander Institute finds while some sectors such as construction remain fragile, companies are looking to fund training to improve their prospects in the year ahead
Investment is rising across Scottish businesses as expectations grow for strong performances in 2018, according to the latest Scottish Chambers of Commerce.
The survey produced along with the University of Strathclyde’s Fraser of Allander Institute found that while some sectors remain fragile, companies are looking to invest in including in training to improve their prospects in an uncertain economic environment.
Construction remains an area of concern with overall sales revenue down, alongside a fall in public sector orders. But the survey noted some encouraging signs for the sector with provide commercial orders up significantly. Cash flow is moving into positive territory as is profitability.
The retail and tourism sectors also continue to face challenging domestic conditions.
Tourism was the only sector to report negative sentiment for future prospects mainly driven by lower guest numbers from Scotland and the rest of the UK.
In manufacturing sales remain positive in most areas with the exception of rest of UK sales which have entered negative territory.
Sentiment in financial and business services softened relative to the final quarter of last year but remained in positive territory overall.
Neil Amner, chair of the Scottish Chambers economic advisory group said: “The results of SCC’s first quarterly economic indicator of 2018 show that while the economy has not been without challenges, most sectors are reporting increasing levels of investment across capital and training.
“A number of factors will underlie this. Legislative change, whether through industry wide regulations such as the GDPR, or through reforms to the Business Rates system via initiatives such as the Business Growth Accelerator, is encouraging firms to upskill their staff and push forward on capital investments.
“Every sector in our report, from Construction to Tourism, expect to see sales revenues increase in the second quarter, with firms anticipating that this investment will gain rapid returns.
“Although some sectors are reporting lessened levels of recruitment difficulties in comparison to previous quarters, such as financial services firms recording a drop of ten percentage points, these still remain relatively high in areas like construction.”
On wider business concerns Amner said: “Certain areas remain stubbornly challenging particularly in manufacturing as the cost of raw materials reflects rising global competition.
“Given the limited ability of firms to pass on these costs to customers, this may also be a further reason for rising investment, as businesses look to compete on customer experience and efficiency.”
And he urged policymakers to work on improving Scotland’s exports and on creating a favourable tax environment and an “attractive migration policy that meets the needs of Scotland’s economy.”
Professor Graeme Roy director of the Fraser of Allander Institute said: “Whilst weak business investment has been a feature of Scotland’s economy in recent times, the survey suggests that levels of investment have increased significantly over the last year.
As we have previously highlighted, in times of uncertainty, it is important that businesses focus on the drivers of growth that they can control such as investing in their own productivity and efficiency, and in developing the skills of their workforce.”