The British Chambers of Commerce filing captures the essence of a relatively bleak picture for the UK economy. In particular, it reports on the results for the fourth quarter of 2022 from its Quarterly Economic Survey (QES), which show that “indicators have stabilized at low levels, but there remain no signs of recovery”.
The two main problems hampering this recovery are cost inflation and persistent skills shortages, which together are weighing down business expectations for investment and growth. Only one in three companies believe their profits will improve in the coming year, with slightly more expecting a decline. Inflation is the top concern for 80 percent of survey respondents, but taxes (38%) and interest rates (43%) are increasingly important.
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Perhaps the most worrying news came from SMEs, with more than half reporting it would be difficult or impossible to meet their energy bills when the UK Government’s Energy Bill Relief Scheme expires on March 31. And almost three-quarters of companies are facing skills shortages and with 82% confirming hiring difficulties, reaching the highest rate since the QES began in 1989.
In light of these concerns, the British Chambers of Commerce (BCC) budget recommendations include a variety of measures designed to help businesses deal with energy costs, which are expected to remain high after the end of the Energy Bill Relief Scheme.
More subsidies for the most vulnerable businesses, in line with proposals that households should be given an additional three months, would be very welcome, but BCC is also asking for government investment in funding to help businesses improve the energy efficiency of their buildings.
Perhaps the most unusual feature of this year’s submission, however, is the list of policy recommendations BCC makes for employment and education. The focus is on tackling economic inactivity and this is a particularly important issue for Glasgow. Glasgow has very high levels of domestic unemployment, appalling health problems and one of the highest proportions of the UK working-age population without any qualifications.
Most skills and education policies will be devolved and come under the responsibility of the Scottish Government, but the BCC proposes some interesting measures for the Chancellor. An example is encouraging companies to offer occupational health services by making them a non-taxable benefit.
This would also expand the tax relief options for parents who bear childcare costs. It would be up to the Scottish Government to explore funding options to make it easier for adults of all ages to access flexible qualifications. Reported cuts in college budgets for next year are not an encouraging sign.
Aside from these BCC recommendations, I would suggest one area for the Chancellor to influence in accelerating Glasgow’s recovery from the pandemic. The growth of new industries around Glasgow’s three innovation districts in engineering, life sciences and advanced manufacturing is one of the brightest future spots for the city’s economy.
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The UK Government’s recent investment in Glasgow as the Innovation Accelerator Partnership (IAP) is helping to embed corporate investment in the commercialization of research in sectors as diverse as space, precision medicine, fintech and photonics. Another IAP round of financing would be desirable. But so is the Chancellor’s allocation of one of her investment zones to the Glasgow City region, which is intended to focus on areas with strong academic research and innovation capabilities.
Glasgow missed out on support for its Clyde Green Freeport bid – and the judging results suggest the bid may have been just as deserving, if not more so, than at least one of the two that were successful. It would be fitting recognition of Glasgow’s potential for economic recovery to receive further government support for its most promising new industries.
Stuart Patrick is Managing Director of the Glasgow Chamber of Commerce
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