Taking the temperature of Scottish business

Anderson Strathern polled more than 250 senior people across industries


Brexit and beyond will continue to present many challenges and opportunities for Scottish busi- ness leaders and whatever the deal, many aspects of Scottish industry are touched by Brexit. Tat’s why we decided to take

the pulse of business Scotland. We’ve polled over 250 senior people from across our industries to understand how ready we are for Brexit. We also looked at the differenc-

es between the two largest Scot- tish economic centres Edinburgh and Glasgow. Here is a snapshot of how Scotland plc feels pre-Brexit, taken from our recent Scottish business research white paper.

How much do we rely on the EU? Te EU is the third most impor- tant market for Scottish compa- nies and the EU workforce is key for the smooth running of our businesses. What’s more, our companies think that leaving the EU will have a negative impact on the economy. Tere is a nervousness around

what may happen to our EU workforce, employment is the largest exposure point. And clients have given us feedback on the need for a transition period to allow the smooth running of

business. More than a third of Scottish companies rely heavily on highly-skilled EU staff and almost a quarter rely heavily on low-skilled EU staff. Regardless of how Brexit develops, there will be a continued demand for an EU workforce in Scotland. More than a quarter of Scottish business’ are expecting to recruit EU workers, post Brexit, than they plan to recruit from non-EU countries.

Scottish business confidence Opinion is divided about corpo- rate Scotland’s confidence under the various Brexit scenarios – a no-deal exit, a negotiated exit and another referendum. We discov- ered a 60/40 split in confidence levels, under a no-deal, and our temperature chart illustrates this.

Business as usual in a no-deal scenario? Gives a 60/40 split

Very confident 31% Somewhat confident 29% Not very confident 25% Not confident at all 15%

How prepared are we? It is clear from the survey results, and it has also been widely re- ported by our Chambers of Com- merce, that SMEs across Scotland need the most help in identifying risks and preparing for Brexit. Only 26% of SMEs in Scotland are completely aware of the tariffs and quotas they may face. Tis is especially true when it

comes to deciphering what World Trade Organisation rules might mean. We are finding that larger


Unanswered questions - Prime Minister Theresa May at an EU Council meeting

companies are more aware of barriers to exporting and importing. Tere is clearly a lot of work

to be done to get our businesses up to speed. With many Scottish companies relying on goods from the EU, supply chain disrup- tion is a key concern, and this is reflected in our poll results on Brexit exposure points.

Glasgow and Edinburgh Glasgow businesses are notice- ably more reliant on the EU, with nearly two thirds identifying it as a key market, compared to under a half of Edinburgh businesses. Glasgow is also much more reli- ant on an EU workforce, perhaps reflecting the nature of busi- ness in the west. Edinburgh are ahead of the game when it comes to assessing Brexit risks, while Glasgow is more practical, being ahead on scenario planning. Stockpiling, something which

also affects the commercial property market, is being carried out by a third of businesses with a further third ‘planning to’. Glasgow and Edinburgh follow this trend. With regards to busi-

ness confidence, Glasgow is much more uncertain than Edinburgh. We are finding many organisa- tions are ‘battening down the hatches’ and ‘waiting to see’ before making a move.

Do we have a crystal ball? We also asked our businesses to forecast their turnover across the various Brexit scenarios over one, three and five years. And 43% of all firms we surveyed said for one year after Brexit they expect a decrease in turnover. We uncov- ered that remaining in the EU is, at present, the best outcome for company turnover. Over the long term - five years - well over half of our respondents are forecast- ing an increase under ‘remain’. Whilst we don’t have a crystal

ball on the outcome of Brexit, we can tell overall that unpre- dictability is affecting business confidence. You can read our full Brexit report – Taking the temperature of Scottish business on our online Brexit Hub at www. l

Bruce Farquhar is Chair of Anderson Strathern.

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