Scottish economy has now entered a period of uncertainty that threatens investment, jobs and growth following the EU referendum, a survey has found.
The first major post-referendum survey of Scottish companies by Fraser of Allander Institute found that just over 60% of Scottish firms surveyed said Brexit will have a negative impact on their business and only 19% said it would have a positive impact. One third said the impact would be “very negative”.
Around 40% believe that Brexit could lead to a decrease in their investment/expansion plans and 34% said that they could be likely to cut back on recruitment plans.
In addition to this, the survey found companies were largely unprepared for the result, as more than 70% of firms had done no preparation for the UK exiting the EU.
For around two thirds (67%) of firms the resolution of uncertainty is a key issue in the UK’s negotiation of its exit from the European Union, as 49% of firms cited access to the single market as a key issue.
The survey found little evidence however, of firms actually cancelling their investment or recruitment plans outright. Within the minority of firms (25%) indicating that they had already made a decision to change their investment and recruitment plans, the vast majority (95%) said that decisions had been postponed rather than cancelled entirely.
Professor Graeme Roy, director of Fraser of Allander, 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 that 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.
“Resolving the current political and economic uncertainty must now be the key priority. It is imperative that policy-makers do all that 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.”