www.glasgowchamberofcommerce.com 27
Why is this environment so complex? Here are some of the issues:
The economy Growth for the UK in 2018 is expected to be 1.4 per cent which is poor compared with other major OECD economies. The positives are that manufacturing exports are doing quite well because sterling dropped 20 per cent in the wake of the Referendum, settling at 12-15 per cent lower. There is also a strong labour market which has been very resilient, but the negative is that big companies are pulling back on investment. “A lot of that is being put down to
Brexit, but I’m not sure how much of it is the Brexit-effect, the global economic cycle or generalised business uncertainty. Even the best possible Brexit deal will really not matter if we don’t have the right conditions for business growth here,” he says. Commenting on the Bank of England’s decision to keep interest rates on hold, he says: “I question whether the window of opportunity for raising rates to get them back to a more normal level is closing. As we get closer and closer to Brexit day, the bank will be under pressure to keep rates low. That may not be the best long-term decision for the economy, although for many businesses it has been a godsend during years of great difficulty.”
On business taxation Dr Marshall says there is an increasing tax burden on the ability to do business, although not corporation tax, which is low and competitive. “People’s business rates have gone up, they have had to pay for pension auto-enrolment, insurance premium tax has risen and dividend tax relief has been lowered. There has been talk about changing national insurance contributions, to pay for the over-65s. The burden of up-front tax that employers have continued to pay is growing and growing.” This does not produce a conducive
environment for people to take risks and be enterprising. “We want to see some of that
taxation pared back so that, after Brexit, people can see that the talent is here, the opportunity is here and Britain is where people want to do business.”
Labour shortages There are labour shortages in most areas of the UK but it has become acute in places.
“It is not simply a skills gap. It is
generalised shortages. Businesses cannot get the bodies that they need in order to expand the business because of the impact of full employment in many areas.”
“Being able to contact customers and suppliers is a basic need for business and yet we hear of companies that literally have to go five miles down the road to get a signal in order to call a customer. Or service businesses where the broadband is so poor on the industrial estate where they work that people have to drive home to upload work to clients on their home networks.” It is also the railway infrastructure, so getting HSR2 going is imperative along with the Heathrow third runway, while the delivery of thousands of smaller projects creates optimism.
Brexit blindness The country needs to get the basics right for growth, says Dr Marshall. “Some of the structural issues that we
Dr Adam Marshall, Director General, British Chambers of Commerce
People and the training system, clearer immigration rules and how to invest in people within the business are absolutely critical and top issues today. With the skills base, training systems are chopped and changed every few years and it becomes difficult to put people through training programmes and invest in growth. He sees Glasgow’s involvement in the Circular Economy as a significant step forward.
Neglected infrastructure The big structural issues that the UK economy faces have not been sorted out. On the UK’s crumbling infrastructure, both transport networks and digital connectivity, he said work must be done. “The state of the roads is something that Chamber members across the country love to comment on. I would venture to say that actually Transport Scotland has as much, if not more, to answer for than many of the roads authorities around the UK.” He also spoke of mobile ‘not-spots’ where there was no or poor coverage.
Even the best
possible
Brexit deal will really not matter if we don’t have the right conditions for business growth here”
face are very important and because of Brexit aren’t getting the attention they deserve. Westminster and Whitehall are of course consumed by Brexit.” He said there is a dangerous game where politicians of different parties are using Brexit to seek electoral advantage. Some parties are adopting positions so that they can create an electoral dividing line with other parties at Westminster, rather than that they think it is necessarily in the best interests of the country. You can see this happening in Holyrood as well. “What we get from businesses is a
general sense of dismay because they want to see the national and economic interest prioritised most of all.”
Business and society compact Dr Marshall says the compact between business and society is perceived to be at a low ebb. While Chamber businesses in general are exemplars of “civic business communities”, he sees businesses impacted by the negative action of a handful of powerful players, such as Carillion, and poor management decisions over pension issues. “Because of these high-profile issues,
we’ve seen a resurging interest in nationalisation and state control which is like waving a magic wand to make it all better. In many events, it would make things far worse. We have a lot to do to repair that contract between business and society in this country.”
A place in the world Dr Marshall points to a “growing strand” of protectionism in many countries and the possibility of trade wars. “Some of this protectionism and this tit-for-tat retaliation is causing collateral damage on our business and communities. There is also investor uncertainty in the UK and some global investors are doubling down. Our message is that the UK is an open, reliable, and liberal place to do business and we want people to keep coming back.”
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