SUSTAINING THE RECOVERY IN UNCERTAIN TIMES

MONDAY 19TH JULY

Scottish Chambers of Commerce have released their Business Survey results for the second quarter of 2010. The survey, conducted in conjunction with the University of Strathclyde’s Fraser of Allander Institute, indicates further signs of a manufacturing-led recovery, a pick up in the tourism sector and some slight signs of increased activity in construction, but the emerging era of public sector cutbacks poses significant questions for both the Scottish economy and Scottish business in the future.

Garry Clark, Head of Policy and Public Affairs at Scottish Chambers of Commerce, said:

“These results show that we cannot take the recovery for granted. Even in the manufacturing sector, which has led the upturn in the Scottish economy over the past few quarters, there are now concerns of an anticipated drop in orders over the next three months, with cost pressures from raw materials and transportation on the rise. At the same time, the construction sector, which has seen some signs of increased activity, is worried over a lack of future work from the public sector.

“It is clear that businesses are anticipating the planned reductions in public spending at a Scottish and UK level to have a dampening effect on the recovery, alongside next year’s rise in the rate of VAT. This is happening at a time when the economy is at a turning point – there are signs of recovery but public spending cuts must be managed and implemented effectively if government is to sustain and increase the recovery from its present fragile levels.

“Above all, business needs certainty and stability, and cuts must be managed intelligently if we are to minimise any negative impact on local communities and local businesses in Scotland. This means that public sector cuts must be accompanied by public sector change and reform. If we are to sustain the recovery in uncertain times, the Scottish Government must continue with its programme of planned capital spending. The new Forth Bridge, the Aberdeen Western Peripheral Route, Borders Railway and affordable housing schemes are all examples of significant public works projects which should help maintain and grow private sector jobs in the longer term. In addition, there remains scope to improve the operation of the public procurement mechanisms to deliver both better value to the public purse and new opportunities to local small and medium sized businesses.

“It is important to build on the successes that are apparent in the Scottish economy. The tourist sector looks like replicating the success of last year’s ‘Year of Homecoming’ and the good weather of the early summer period may encourage another strong year for domestic tourism and ‘staycations’. However, discounting remains commonplace in the sector, and high Business Rates increases for many hospitality businesses this year have been significant cost pressure for many of these businesses. ”

Click Here to view the survey results in full

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