More info needed before indy vote, says SCC
Scots firms don’t yet feel they have enough information to make up their minds on Scottish independence, a Scottish Chambers of Commerce members’ survey out today finds.
The survey, conducted in conjunction with eminent Scottish economist Professor David Bell and co-funded by the Economic and Social Research Council, says most Scottish businesses are unclear about the business implications of next year’s independence referendum.
The results echo evident frustration across the business community on the implications of a ‘yes’ vote ahead of the publication of the Scottish government’s White paper due in the autumn.
The SNP is placing much store on this document – perhaps too much. It says it will answer most of the questions now being raised at business meetings up and down the country.
But business owners and entrepreneurs could end up disappointed if, as many fear, the document is unable to provide much more clarity on key issues such as business taxation and regulation.
Businesses are already unsure it will provide the answers they need. A great deal will depend on the outcome of negotiations with the UK government. But these will not be held until after the referendum vote – and are conditional on there being a ‘Yes’ result.
Faced with this uncertainty there are likely to be growing demands for greater commitment to economic recovery regardless of the referendum outcome and for solid, practical commitment to measures around which Scots businesses can plan. The danger is that a policy vacuum will develop over the next 12 months with a stand-off between business and government. However, judging by latest survey evidence (see this page), Scots SMEs are more confidence about prospects over the next 12 months and many plan to recruit.
What the SCC survey, based on a sample of more than 800 businesses conducted between June 5 and 19 reveals, is that there is already an information vacuum.
Says Liz Cameron, chief executive of the SCC, “Nearly 60 per cent of businesses surveyed said they didn't know enough to take a view on whether Scotland should become independent or remain within the UK. We also found that over 70 per cent of businesses that responded expect that independence would affect their business.
“This sends a clear message to those conducting the constitutional debate in Scotland that more information is needed on key business concerns to ensure that the choice made in 2014 is based on the best evidence available about the implications of the alternatives offered.
“SCC represent businesses of all sizes and sectors across all of Scotland. While our survey found that many concerns were common across the business community, businesses in Scotland's largest cities were slightly more likely to feel comfortable that they were getting the information they needed than those in the rest of Scotland, demonstrating a clear need to make access to information and debate inclusive of all of Scotland.
“The key issues for the surveyed businesses were taxation, Scotland's status in the EU and our currency. Business needs clarity on these matters if they are to be able to make an informed judgement come the referendum.
“Scottish Chambers of Commerce will be working hard between now and referendum day to make sure that members' priorities are being addressed. This survey shows that the constitutional debate hasn't yet engaged clearly enough with the priorities of the Scottish business community.
“Today, we call on those on both sides of the debate to examine their plans and to ask themselves what more they could be doing to make sure that the Scottish business community has the information it needs.
“Scottish Chambers of Commerce are apolitical. Our members have a range of views. Our role is to make sure that those views are as informed as possible; these survey findings confirm our commitment to making sure that those taking part in the constitutional debate address our members' priorities as fully and as clearly as possible in the lead up to the referendum.”
KEY FINDINGS:
Around 58% of businesses say that they don’t know enough to take a view about the implications of Scottish independence for their businesses. On the other hand, 37 per cent seem to have a view already.
Most of the responding businesses (62%) trade mainly within Scotland. A major concern for those firms trading mainly with the rest of the UK (18%) is how independence might affect their business. The same is true for those whose main trading partner is the EU.
Those firms trading mainly with the rest of the UK are far less likely (25%) to feel that they know enough to take a view on the implications of Scottish independence on their business, compared to firms trading mainly in Scotland (39%), mainly with the EU (40%) and mainly with the rest of the world (42%).
Many businesses acknowledge that the precise outcome of independence would depend on currency arrangements and the extent to which tax/regulatory frameworks would differ in Scotland from the rest of the UK – which are, as yet, unknown.
Scottish Chambers of Commerce have already identified a number of information gaps regarding how a Scottish economy would operate post-independence. The survey has identified the number of firms citing these as important. At the top of the list, come business and income taxes, the currency and Scotland’s status in the EU. Each of these factors was identified as a concern by more than 60% of responding businesses. How the Scottish economy would be regulated (business, finance and labour) after independence was also recognised as an important information gap.
More than 70% of businesses felt that independence would affect their activities.
SCOTTISH EXPORTERS - WHY WE NEED TO DO MORE
One of the least explored issues in the independence referendum campaign was Scotland’s export performance, in particular exports to countries beyond the UK.
This was even more remarkable given the exhortations in the wake of the 2008-09 financial crisis to rebalance the economy towards manufacturing and in particular to exports.
According to the Global Connections Survey, Scottish international exports in 2012 (exc. oil and gas) were reckoned at £26 billion, up £1.4 billion (5.9 per cent) on 2011.
Of this, some £15.4 billion was by manufacturing sector companies and £8.7 billion by the service sector. Manufacturing sector exports increased by £1.1 billion (7.9 per cent) over the year and service sector exports increased by £465 million (5.6 per cent).
Such figures on their own might seem respectable enough. But not all Scot-buzz readers concur.
This from David Scrimgeour, a Scotss lawyer who has lived and worked in Germany for over 20 years. In the 1990’s he was the Scottish Government’s investment representative and in 2000 he founded DS Consulting to advise international companies and governments on strategy and business development:
Hi Bill
The Referendum debate underlined, in my view, the complete dependence of the Scottish economy on the English market and the City. But are there any new moves to internationalise Scottish business?
Scotland was threatened with company departures, mortgage cost increases, pension losses, share sales and runs on Scottish banks in addition to the removal of the currency. And yet, to date, there has been no discussion in Scotland of the obvious need to diversify the economy beyond British shores and to find new sources of finance and export markets in order to reduce these business and political risks.
And this is also despite the additional looming risk of a Brexit in a couple of years’ time. You would think that this would be an ideal policy issue for the SNP party to promote, especially for the Yes Generation.
SCDI has identified internationalisation as a key element for creating “a robust and sustainable economy” and notes the average export rate (i.e. outside of the UK) of Scottish companies is 7 per cent. This contrasts with the average in Bavaria of 50 per cent - and 73 per cent here in Munich.
So, despite the efforts of Scottish Enterprise over the years, international activity by Scottish SMEs in particular is dangerously low. The only consolation is perhaps that UK companies generally are no different but how comforting is that?
Best wishes
David
Export help for SMEs has long been a priority for the Scottish government and its agencies. And this letter well illustrates the need for these efforts to be encouraged and sustained. It would only be fair to point out that the headwinds created by continuing economic problems in the Euro-zone, particularly in the light of the latest IMF forecast downgrades. The 27-member currency zone is our largest export market outside rUK.
Meanwhile, what are the facts? Scotland’s two largest exporting industries in 2012, as in previous years, were manufacture of food & beverages (£4.7 billion) and manufacture of coke, refined petroleum and chemical products (£4.1 billion). These were followed by legal, accounting, management, architecture, engineering, technical testing and analysis (£1.7 billion), wholesale retail, repair of motor vehicles and motor cycles (£1.7 billion) and financial and insurance (£1.4 billion).
The US continues to be Scotland's top international export destination with an estimated £3.6 billion of exports, an increase of £235 million since 2011. Netherlands was the second top export destination with exports of £2.7 billion, although exports are estimated to have decreased by £340 million (11.3%) over the year. France is Scotland's third top export destination, estimated to be worth £2.2 billion, increasing by £455 million (26.4%) in 2012.
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EXPORT DATE FOR THE DIARY
SMEs looking for export opportunities should note the next big event: Explore Export on 10 November. It brings together 65 global commercial officers to Scotland to talk to companies on a 1-to-1 basis about the opportunities for trade and export in their own territories. Venue: Murrayfield Stadium. Admission free and more details at www.scottish-enterprise.com.
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What of SME export performance? Very problematic as David suggests, but all the more reason, perhaps, to remind ourselves of where success has been achieved and to learn lessons accordingly. Here are three worth highlighting:
•The isle of Arran Brewery has opened a company in the USA to boost exports into America. The company will not just be importing its own beers but will be importing other Scottish and other European Craft Beers into the US market, which grew by 18% in the last six months alone. Managing Director Gerald Michaluk Said “ We have had great support from Scottish Enterprise and STI as well as UKDTI in entering the US market and this major drive will see Arran Beers being available to beer wholesalers throughout the USA in 2015.” Independent Scots brewer BrewDog received support from SDI in finding new routes to market in different countries, introducing leads and presence at trade shows.
•Translation services agency Lingo24 received support through the Scottish Enterprise GlobalScots network. The company achieved £7 million in sales last year.
•Probe Test Solutions, supplying test hardware to semiconductor companies, received support to develop exports, finding local contacts in target markets in Russia and Eastern Europe, trade show support and funding support to employ an export manager.
Meanwhile, activity this year has included:
•A delegation of Scottish craft brewers has just completed a five day visit to the US and Canada led by Scottish Development International (SDI). The aim was to provide access to brewers, industry experts, buyers and importers.
•SDI has opened its first office in Africa, enabling the agency to double the number of companies it supports into the market to around 300 by 2014/15 and increase international sales to Africa beyond the current £2 billion mark.
•In May, three Scottish oil and gas supply chain companies expanded into the US market and opened new operations in Houston, Texas. A record number of Scottish oil and gas companies attended the Offshore Technology Conference (OTC) in Houston, almost half attending for the first time.
•In April a delegation of Scotland’s food and drink sector visited Singapore to explore export opportunities. Eighteen organisations took part, including leading brands such as Highland Spring, Paterson Arran, Highland Smoked Salmon and Mackie’s at Taypack as well as newer entrants such as Loch Ness Brewery, Garvies Soft Drinks and Burgon’s of Eyemouth.
Says Neil Francis, SDI’s International Operations Director, “If we want our companies and our economy to grow, we must increase the number of companies exporting for the first time, and help existing exporters increase the value of their exports.
“We need to raise the awareness and ambitions of companies to the benefits of international trade, help them to build their capability and capacity and support them to exploit the opportunities.
“We support companies with preparing to export workshops, online learning tools and case studies to develop robust international strategies. And we provide companies with access to the know-how and expertise including our specialists in our 29 international offices to explore key markets.”
Economy Forecast
22 Oct
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SHOPPERS SHUN BIG CHAINS FOR INDEPENDENTS
Encouraging news for high street entrepreneurs: independent shops, bars and cafés are opening at their fastest rate in years in a boost to the high street as customers shun the big retail chains.
According to the Local Data Company (LDC) and the British Independent Retailers Association (Bira), more independent stores opened in the last year than closed. While giants such as Marks & Spencer, Tesco and Sainsbury are still in the doldrums, Britain’s high streets are not suffering as badly as analysts have claimed.
Shoppers turned to local outlets in record numbers, with net openings of 432 in the last six months. That was the result of 8,662 new independent retailers opening and 8,268 shutting their doors.
Last week PwC and the LDC revealed that town centres had 964 net closures of all types of stores between January and September, but this was mainly due to the collapse of high-street chains, including Phones 4U and La Senza.
Said Matthew Hopkinson, director at the LDC, “The growth in independents, the ‘silent majority’, is a significant factor in preventing vacancy rates [the number of empty shops] rising in our town centres and also reflects the consumer response to a more personal and unique offer that many independents bring.”
E-cigarette shops, barbers and independent cafés and restaurants were among the largest type of store to open in towns, while independent clothes and shoe stores closed.
A rise in the number of shoppers heading to high-street independents was also highlighted by online sales growing at their slowest rate in more than a year, according to the British Retail Consortium and KPMG.
Online shopping rose 8.2% last month, compared with a three-month average of 13.8%. Clothing and footwear sales also fell online for the first time on record, as the warmest and driest September ever recorded meant that shoppers shunned autumn and winter collections.
David McCorquodale, the head of retail at KPMG, said: “The warm weather melted sales of clothing and footwear online, as shoppers chose to dig out their summer wardrobe rather than investing in new winter woollies. As the weather cools and people start planning for Christmas this trend should quickly reverse.”
In Scotland, you bet.
