Experts warn “We’re heading towards recession”. But hang on – are we really?
A report this week says there are signs that the well documented slowdown in the Scottish economy is coming to an end and that business optimism is returning.
The Royal Bank of Scotland’s quarterly monitor finds more firms expecting sales to grow over the next six months than the number expecting a fall.
Financial and businesses services show signs of renewed strength in the past three months. Repeat orders also looked healthy for tourism ahead of its busy season.
The fantastic sunny weather for most of May threw a lifeline to many tourist-related businesses in rural Scotland after last year’s rain-soaked summer.
However, the RBS survey of 500 Scottish businesses suggested that the oil industry slump was still hurting business in north-east Scotland.
Ironically, the survey was conducted by the Fraser of Allander Institute, which warned only last week that Scotland may fail to avoid recession this year.
The RBS survey is more upbeat, with companies across the country expecting to see an increase in business volumes, sales and repeat business during the next six months.
Last week our lead story on Scot-Buzz – “12 Reasons to be Cheerful – just a bit” – listed upbeat pointers including a pick-up in UK –wide industrial production, a fall in the trade deficit, a pick-up in construction and Markit/CIPS surveys for May suggesting a modest pick-up in growth.
And it follows figures last week showing unemployment in Scotland fell by 11,000 between February and April to stand at 5.8% with the employment rate at 73.2%.
While both numbers trail the UK, the number of people claiming Job Seeker’s Allowance fell by 500 to 57,100 – that’s 19,200 lower than a year ago.
Announcements of business expansion and inward investment have continued. And while the Scottish Retail Consortium bemoans a continuing decline for in-store sales – down by 0.3% – after adding in online sales, total non-food sales are up by 2.6%- the best performance since August 2014.
So much for fears that consumers would draw in their horns because of referendum uncertainty.
The RBS survey reports companies across the country expecting to see an increase in business volumes, sales and repeat business during the next six months.
Almost a third (31%) of firms reported a fall in the total volume of business during the last quarter, compared with 30% who witnessed an increase in activity.
However, the balance of -1% represented an improvement of 18 points on the first quarter of the year.
It finds the performance of financial and businesses services firms was especially strong, with more than one in five (22%) reporting an increase in business volumes – the exact opposite of the FoA summation that has financial services “especially weak”.
Overall, a net 18% of firms which took part in the survey said they expected to see a rise in repeat business for the remainder of 2016.
So which is right – Fraser of Allander or Royal Bank of Scotland? It’s no cop-out to say both are borne out by what we are hearing and seeing across business.
One prominent architect in the Stirling area told me in no uncertain terms the other week how he felt: “the Scottish economy is s***t – you can’t run the country on sporting events and arts festivals. There’s nothing of substance.”
Many businesses are just ticking over with a thin trickle of new business. But elsewhere, while there is little buoyancy it doesn’t feel as if we are heading into a recession, either.
In recent weeks SSE and partners have agreed to go ahead with the development of the Beatrice offshore wind farm in the Moray Firth, with an estimated investment of £2.6 billion. The wind farm will have 84 turbines with a capacity of 588 MW, which could provide electricity for 450,000 homes.
FirstGroup is investing £70 million in 305 new buses and Alexander Dennis of Falkirk will make 204 of the vehicles.
Murray Estates have had their plans to create a new £1 billion village on greenbelt land sited beyond the City Bypass in west Edinburgh approved. It will see 1,350 homes built in the first phase of the development. Under the plans at least 3,500 homes could be built.
ScotBuzz does not believe governments can avoid recessions. And new grandiose strategies from ministers are not what’s needed.
Better, surely, to run a spot check on those agencies and bodies such as Business Gateway and Scottish Enterprise and ask customers how they can be improved. Where are the examples of best practice, and how can they be extended?
Positive, practical steps can be taken to help ease the regulatory burden on small business and make advisory services such as that on exports more effective. Local councils could be encouraged to step up high street and town centre refurbishment. And further efforts could be made to speed progress on planning applications.
These are all areas where the administration has already done work. What we need now is a renewed drive on implementation to achieve results.
It’s not a grand strategy. But it’s a start.