THE Conservatives have certainly made short work of raising the fences in the Great British economic steeplechase in recent years.
They seem in many ways to have
developed a real specialism in building big barriers to business success and to consumer confidence. Households are under severe strain, laid low by years of austerity and now also by the renewed fall in real wages arising from the surge in inflation caused by the pound’s tumble following the foolish Brexit vote.
A survey published this week by the Institute of Chartered Accountants of Scotland (ICAS) included a list of the top barriers to growth in the UK, based on the views of finance chiefs.
The top three barriers are particularly eye-catching, in the context of our current predicament. They are domestic political factors, Brexit issues, and skills shortages.
ICAS’s latest survey was conducted between June 19 and July 19.
This followed Prime Minister Theresa May’s snap General Election on June 8, which seemed to be aimed in large part at quelling any dissent over the Conservatives’ calamitous Carry On Brexit approach but ultimately backfired spectacularly.
The Tories lost their overall majority but went on to form a Government with the backing of the Democratic Unionist Party.
The ICAS survey reveals domestic
political factors are now viewed as the
greatest of the key barriers to growth by company finance chiefs, having been considered the second-largest impediment last summer immediately after the Brexit vote.
This is not that surprising, given businesses tend to dislike political uncertainty, although it should be observed the Conservatives’ loss of their overall majority may well be a good thing for the economy in the long run in terms of not giving them carte blanche on Brexit or much else.
The hazards of giving the Tories a free run to exacerbate the debacle ensuing from the Brexit vote have been evident again this week.
The warning signs are not without their farcical qualities, but it is important to remember that, in terms of people’s lives, this is no laughing matter but a sad mess.
Labour MP Chuka Umunna this week tweeted: “David Davis just said in the Commons that nobody pretended that Brexit would be easy. That will be news to the Trade Secretary.”
He was referring to a statement on Tuesday in the House of Commons from David Davis, Secretary of State for Exiting the European Union, that “nobody’s ever pretended this would be simple or easy”.
Mr Umunna, in his reference to the Trade Secretary, was contrasting Mr Davis’s proclamation with a comment from International Trade Secretary Liam Fox to the BBC in July that an EU trade deal would be one of the “easiest in human history”.
However, while the contradictions in the Conservatives’ soundbites should be highlighted, there have been much more alarming revelations about the UK Government’s thought processes this week.
The Guardian reported on Tuesday the UK would end the free movement of labour immediately after Brexit and introduce restrictions to deter all but highly-skilled EU workers under “detailed proposals set out in a Home Office document” leaked to the newspaper.
This is the latest sign of a heavy-handed approach to immigration from the Tories
– one that poses grave dangers for society and the economy.
The response from the Confederation of British Industry appeared to be on the diplomatic side but underlined the importance of workers from other EU countries in addressing skills and labour shortages in the UK.
Neil Carberry, CBI managing director for people and infrastructure, declared: “Businesses will look for the Government’s final position paper to support an open but managed approach to immigration.
“That means taking the initiative to guarantee those already here that they can stay,
a transition period with limited changes so firms can plan ahead, and a final system for the EU that is simpler and more open than the complex work permit system run for non-EEA (European Economic Area) countries.”
Brexit-related issues, which had been viewed as the greatest key barrier in the ICAS survey last year, were considered by finance chiefs to be the second-biggest impediment this time round. So Brexit continues to hang very heavily in the minds of finance chiefs, more than a year after the fateful vote.
Interestingly, the depressed oil price was cited as the eighth-biggest of the key barriers to expansion. It had been viewed as the fifth-largest impediment a year ago.
This might be slightly encouraging, from a Scottish perspective, although the oil and gas sector continues to face very tough times.
So does the UK economy as whole. A survey of the key UK services sector, published this week by the Chartered Institute of Procurement & Supply, made for grim reading.
At a time when the eurozone seems to be doing a lot better, the CIPS survey signalled UK economic growth would likely be about as miserable in the three months to September as it was in the first two quarters of
this year.
Nearly seven in 10 finance chiefs in the ICAS survey expect the UK economy to decline, stagnate or achieve negligible growth over the coming 12 months. Flat or negligible growth is defined as expansion of between zero and 0.9 per cent, way adrift of an average annual long-term rate for the UK put at about 2.75 per cent by Bank of England Governor Mark Carney.
Meanwhile, skills shortages were identified by finance chiefs in the ICAS survey as the third-biggest of the key barriers to expansion, having been viewed as the seventh-largest impediment a year ago.
Many companies and industry bodies have warned of the part the Brexit vote is playing
in exacerbating skills shortages, in terms of difficulty in attracting or retaining staff from other EU countries.
These worries are well-grounded, as has been underlined this week in a survey published by accountancy firm KPMG.
Given the Conservatives’ seemingly often hostile attitude towards the EU migrants who contribute so much to our economy, it was perhaps not surprising this week to see the KPMG survey’s finding that 46 per cent of EU citizens working in Scotland may leave the country because of Brexit.
Of those surveyed, 39 per cent are considering leaving and seven per cent have already made up their minds to go.
These findings might not be surprising given the UK Government’s lamentable,
foolish, and damaging mood music on immigration, as it builds further hurdles to economic success. However, the fact these stark findings are not surprising does not make them any less alarming.
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