More than three quarters of Scottish firms fear Brexit is ‘bad for business’

Most Scottish firms believe Brexit is bad for their prospects and the economy, according to a survey by the University of Strathclyde’s Fraser of Allander Institute.

The economic research institute questioned 320 businesses following the vote on leaving the EU.

The survey found more than 60 per cent of Scottish firms believe Brexit would have a “negative impact” on them.

However, the institute said there was little evidence of companies cancelling investment or recruitment outright.

The Fraser of Allander Institute, an independent research body based at the Glasgow-based university, carried out the survey between 5 July and 12 July, in the aftermath of the EU referendum.

Just over 60 per cent of Scottish firms surveyed said they believed Brexit will have a negative impact on their business, while only 19 per cent said it would have a positive impact. One third said the impact would be “very negative”.

About 40 per cent believe that leaving the EU could lead to a decrease in their investment and expansion plans, and 34 per cent said that they could cut back on recruitment.

More than 70 per cent of firms surveyed as part of the research had done no preparation for the UK exiting the EU.

Two-thirds of businesses said resolution of the uncertainty in the economy was a key issue in the negotiation of the UK’s exit from the European Union, while 49 per cent of firms cited access to the single market as a key issue.

While the survey found little evidence of companies actually cancelling investment or recruitment plans, some investment and recruitment plans have already been put on hold by a significant proportion of Scottish businesses in the wake of the UK electorate’s vote on June 23 to leave the EU.

The study found 25 per cent of firms have made a decision to change their investment and recruitment plans.

Fraser of Allander noted that, of these firms, 95 per cent said decisions had been postponed rather than cancelled entirely.

Professor Graeme Roy, director of the Fraser of Allander Institute, said: “This is the first hard survey evidence post-referendum of what businesses in Scotland are thinking and how they are responding to the unexpected EU referendum result.

“A clear majority believe the impact – certainly in the short to medium term – will be negative. The survey offers some evidence that investment and recruitment plans may be being put on hold.”

Mr Roy declared it was crucial for policy-makers to minimise instability arising from the Brexit vote as swiftly as possible.

He said: “Resolving the current political and economic uncertainty must now be the key priority. It is imperative policy-makers do all they can to help reduce this source of instability to allow businesses to invest and press ahead with their recruitment plans. The longer the period of uncertainty continues, the more damaging the impact will be on the economy.”