Scottish businesses expect Brexit hit

A majority of businesses responding to the survey expect to see their costs rise

Nine in ten businesses in Scotland expect Brexit to have an important, or very important, impact on them, according to research by the Fraser of Allander Institute.

Its Scottish Business Monitor indicates that 30% of all businesses are scaling back all new investment in the run-up to the UK leaving the EU.

It found 71% of firms expected costs to increase over the next six months.

But most said their long-term economic confidence remained high.

Produced by the Fraser of Allander Institute and law firm Addleshaw Goddard, the survey monitors business opinion and activity by polling more than 500 firms across Scotland.

The latest report covers the period from June to August.

Investment fall

Fewer firms are reporting increases in capital investment, with the current rate below the average of the last five years.

But the financial services sector experienced the strongest growth, with a quarter of firms experiencing increased business activity.

Companies in the accommodation and food services declined to a net of -32%.

Manufacturing also moved back into negative figures, with a net response of -2%.

Energy businesses, including renewables, continues to see new investment

Fraser of Allander's head of economics Prof Graeme Roy said: "Coming after last week's negative growth figures for Scotland, today's survey shows that despite all the Brexit uncertainty, Scotland's businesses are remaining resilient. Growth appears to have returned in the summer months.

"But today's survey of Scottish business sentiment shows that over 90% of Scottish firms expect that the ongoing economic uncertainty will have an important, or very important, impact on their operations in the coming months.

"Unblocking the Brexit deadlock is absolutely crucial and will enable businesses to get back to what they do best, creating jobs, investing in the future of their operations and growing into new markets."

Addleshaw Goddard senior partner in Scotland, Malcolm McPherson, added: "These figures show firms are not relaxed in spite of incremental growth and remain focused on weathering the storm that is Brexit, scaling back growth ambitions and investment accordingly.

"There are some exceptions, such as the energy sector including both traditional oil and gas, and the renewables industry.

"Energy is a key strength of Scotland's economy, and continues to attract investment for growth and long-term sustainability."