Brexit fears bite, but Scottish businesses remain resilient – Grant Thornton

The firm’s quarterly International Business Report data aims to offer a snapshot of economic conditions throughout the world.

Senior decision makers in Scotland were among thousands of business leaders in 36 economies who were asked for their views between May and June 2016, just ahead of the EU referendum.

Despite the threat of Brexit and continuing uncertainty over oil and gas prices, half of all Scottish respondents (50 per cent) believe their profits will increase this year.

The figure represents a drop of 6 per cent from Q1 2016, but remains substantially above the global average of 36 per cent.

Meanwhile, 56 per cent of Scottish businesses are optimistic about wider economic conditions over the next 12 months – 21 per cent higher than the Eurozone average of 35 per cent.

On employment prospects, 44 per cent of Scottish firms plan to increase staff numbers in the coming months – more than any other part of mainland Britain.

While the IBR data paints a generally positive picture from Scotland, there are some areas of concern, including exports. Only 11 per cent of Scottish businesses are looking to increase exports this year, down from 14 per cent last quarter and below the global average of 15 per cent.

Debbie Mayor, associate director of advisory at Grant Thornton in Scotland, said: “The IBR data provides some reassurances about the resilience of the Scottish business community. However, it’s important to remember that the research was conducted before the Brexit result, which has had a major impact on the global economic outlook. The next quarter’s data should provide us with a clearer idea of just how significant the impact of the Brexit result has been for Scottish confidence levels

“The decline in export prospects already provides a hint that Scottish companies have been getting increasingly nervous about global trading conditions, and potentially over-reliant on domestic sales.

“Amid a momentous period of pressure, Scotland’s businesses are proving to be resilient and focused, but the markets need stability and assurance in order to function and grow sustainably. What’s now needed is some clarity and collaboration from the political world to ensure that both the Scottish and wider-UK economies can withstand the pressures of the coming weeks and months.”