Brexit could release a “wall of cash” to companies if it is “done well”, business leaders say.
With uncertainty over the UK’s departure from the European Union having “stymied” investment, the Scottish Chambers of Commerce (SCC) said money that been held back could be released once Brexit is completed.
SCC president Tim Allan said that if “Brexit is not just done but done well, there is significant potential for an upside”.
He spoke out after the latest SCC quarterly economic study showed overall business performance had declined in the last year.
Mr Allan said this had happened “as companies take on board extra uncertainties caused by the tortuous progress of the Brexit process”.
He said: “We continue to affirm the view that a disorderly, no-deal departure from EU will have painful, long lasting consequences for the economy in Scotland and the UK. But we also believe that, if Brexit is not just done but done well, there is significant potential for an upside.
“Uncertainty has undoubtedly stymied corporate investment. We put a direct challenge to political leaders today – deliver a positive outcome to Brexit and the economy will benefit.
“We believe there is a wall of cash that has been pent up while the process of leaving the EU has unfolded which can and will be unleashed.”
The research, carried out together with the Fraser of Allander Institute economic think tank, covered the period June to September 2019.
More than three quarters of firms in the tourism sector are looking to take on workers, it found, with half these companies reporting recruitment difficulties.
In the construction sector, sales had slowed, while less than a quarter of companies reported investment was rising. And in manufacturing total sales revenue fell back, with sales trends described as being “significantly lower than recorded for the for the same quarter of 2018”.
Mr Allan said the challenges facing businesses were “laid bare” in the report.
He added: “As the UK faces yet another deadline in the Brexit process, construction and manufacturing have reported severe challenges in terms of future orders, exports and investment.
“Meanwhile companies in sectors including retail and tourism face continued challenges in recruiting people with the right skills as the number of available workers from Europe continues to decline.”
Professor Graeme Roy, director at the University of Strathclyde’s Fraser of Allander Institute, said: “Scottish businesses appear to be treading water as they await clarity on the terms of the UK’s exit from the EU. ”
He added: “The data suggests that Scotland should avoid a ‘technical recession’ – defined as two consecutive quarters of negative growth – when the next set of official figures are released later on this year. However, growth remains fragile and investment levels remain weak.
“A ‘no-deal’ Brexit remains the greatest immediate risk to the Scottish economy. It is misguided to argue that ‘no deal’ is better than further delay. A ‘no-deal’ would not only act as a major economic shock but will do little to curb uncertainty, with the UK’s future relationship with the EU still needing resolved.”
Scottish Finance Secretary Derek Mackay called for a no-deal Brexit to be ruled out, adding: “It’s clear from this latest report that Brexit uncertainty, and in particular the threat of ‘no deal’, is having an increasingly negative impact on business confidence.”
He said the Scottish Government was taking steps to mitigate the impact of Brexit but could never be entirely ready for leaving the UK without a deal.