A business group has urged firms to “plan ahead now for the recovery in oil prices” as its survey revealed mixed results on the Scottish economy.
The Scottish Chambers of Commerce’s (SCC’S) Quarterly Economic Indicator survey revealed that gloom among oil and gas firms has hit expectation in the performance across the finance and business services sector.
The category is one of five covered in SCC’s quarterly survey, which also includes construction, manufacturing, retail & wholesale and tourism.
The report showed profits have declined for 45.1% of services firms surveyed, giving a new percentage balance of -26. SCC said this marked the fourth consecutive quarter that services firms reported net balance profits in negative territory, and is the lowest recorded figure since the sector has been quizzed in the survey since 2014.
The report also found that optimism in the manufacturing sector was “fragile”, with just over a third of firms reporting a fall in optimism. However, over 80% of those surveyed said that investment had either increased or remained the same over the previous quarter.
Meanwhile, the tourism industry in Scotland had a strong quarter in terms of sales and investment trends, although worries were revealed over future performance and tightening profit margins. The SCC report also found that the construction industry, which was “influential in keeping the Scottish economy out of recession in 2015”, performed strongly in the early part of this year and “continues to demonstrate positive expectations for the future”. Growing online sales have also helped to boost confidence in the retail sector, SCC said.
Liz Cameron, chief executive of SCC, said: “It is important that lessons are learned. As the construction sector continues to experience worrying levels of skills shortages due to rapid growth following a period of recession, so we must plan ahead now for the recovery in oil prices, ensuring that the oil and gas sector has the talent it needs when the sector resumes growth. Future skills needs must be met from the widest possible range of sources, including workplace learning and the reskilling of older workers.
“Costs to businesses must also be considered at a time when many firms are implementing the National Living Wage and auto-enrolment. As businesses take on more financial responsibilities over their employees, it is time that the rising burden of business rates was reduced, and this must be one of the key objectives of the forthcoming review of rating in Scotland announced by the Scottish Government.
“As Scotland prepares to head to the polls for next month’s Scottish Parliamentary elections, we know that our economy is on a knife edge between growth and recession and that the prospects for the future are unclear. In these circumstances, it is imperative that our new Scottish Government puts the economy at the centre of its plan for government over the next five years, systematically addressing those factors under the Scottish Parliament’s control that could be used to make Scotland the most competitive place in the UK to do business.”
