Scotland business leaders back Industrial Strategy – but seek boost for emerging rather than established players

More than nine out of ten (91 per cent) business leaders in Scotland believe that the UK needs a comprehensive industrial strategy, according to BGF’s Growth Climate Index.

However, the survey of British business leaders and entrepreneurs measuring confidence in the UK’s business growth environment has revealed that three quarters (67 per cent) want the Government’s proposed Industrial Strategy to direct targeted support towards emerging businesses and sectors (e.g. clean energy, robotics and biotechnology) compared to just 18 per cent who believe that the Government should prioritise support for established business and sectors.

The findings point to considerable support for the principles behind the Government’s Industrial Strategy. Nine out of ten (91 per cent) of business leaders agree that under certain circumstances, it is right for the Government to intervene in the private sector to support economic growth. A further 84 per cent believe that the Government should focus on supporting SMEs specifically as it seeks to boost productivity.

While there is broad agreement on the principles, respondents are divided over whether further clarity on Brexit is more important for British business than an industrial strategy at this stage – 53 per cent agree compared to 47 per cent who disagree.

However, the evidence indicates that business leaders are overall feeling more positive about the outlook for growth. The results of the previous Growth Climate Index, conducted immediately after the Referendum vote showed that 68 per cent believed that conditions would worsen compared to just 15 per cent who expected them to improve. This has changed to 44 per cent expecting conditions for growth to improve over the next quarter compared to 38 per cent who expect them to worsen (18 per cent don’t expect them to change).

When asked about their assessment of the past quarter, 38 per cent believe that conditions for growth have improved over the last quarter compared to 20 per cent who believe they have worsened (42 per cent think they have remained the same). Again, this represents a significant change from the last Growth Climate Index conducted in July 2016 when 58 per cent believed that conditions had worsened in the previous quarter compared to only 14 per cent who thought they’d improved.

Mike Sibson, Investor, BGF in Scotland said: “Whilst there is still uncertainty amongst Scottish business leaders, I am pleased to see signs of cautious optimism emerging in the economy. British businesses are beginning to develop a positive and pragmatic vision for the future and the Government’s Industrial Strategy is an important part of this process.

“The survey reveals strong levels of support for the Industrial Strategy in Scotland but it is clear that business leaders want a different approach from previous government initiatives. The Government must look to support and energise emerging businesses and sectors as opposed to propping up the established players. This will ensure we are in the best position to drive innovation and eliminate the productivity gap.”