Scottish firms 'weighing costs of Brexit dithering'

Scottish firms are putting off investment because of uncertainty over the UK's future relationship with Europe, according to a survey.

Scottish Chambers of Commerce (SCC) found firms were struggling to grow, amid political deadlock over Brexit.

Firms reported a rise in costs as they prepared for Brexit, with manufacturers stockpiling raw materials.

Most sectors also saw wage bills rise in the second quarter, as firms paid more to retain staff.

SCC said businesses were "weighing the costs of the chaos caused by more dithering over Brexit".

Tory leadership rivals Boris Johnson and Jeremy Hunt have been at loggerheads over how the UK should leave the EU.

Both contenders for prime minister have claimed they can renegotiate a Brexit deal that the EU says is closed.

SCC's latest quarterly economic report found all sectors, except retail, had increased wages over the last three months in a bid to keep skilled workers.

The majority of sectors - particularly manufacturing and construction - also reported rising cost pressures from raw material prices.

Meanwhile, many sectors noted increasing recruitment difficulties. Among tourism firms, seven out of 10 recruiting firms reported challenges, with more than half of firms in manufacturing facing similar issues.

Despite this, overall business confidence made a slight recovery north of the border, according to the survey of 350 firms.

'Severe burden'

SCC president Tim Allan said: "Businesses are weighing the costs of the chaos caused by more dithering over Brexit and the burden is severe.

"Our members are crying out for the return of some sanity as they undertake the important role of creating jobs and paying taxes.

"Scottish businesses need to see steps being taken to avoid a disorderly Brexit and a responsible consensus reached as soon as possible on the Brexit process with the European Union."

Mr Allan added: "Since the initial cliff edge Brexit of 29 March, the pressure on firms has eased slightly but the underlying trends point to an economy running on fumes.

"The majority of firms for all sectors in the survey are putting off investment and say this trend will continue over the summer months.

"All are desperate for some kind of resolution to Brexit before the 31 October deadline."

Meanwhile, KPMG's latest quarterly economic outlook has indicated weak UK growth for the rest of the year.

KPMG senior partner in Scotland, Catherine Burnet, said: "It's clear that the combination of deepening political uncertainty at home and an apprehensive global outlook are taking their toll on the Scottish business community.

"Continued under-investment should be anticipated if greater clarity isn't provided on the future direction of the UK's global trading relationships."