Survey suggests fall in business optimism over Brexit

Concerns over the UK's post-Brexit future are increasingly weighing on business confidence in Scotland, a quarterly survey has suggested.

The Scottish Chambers of Commerce found robust financial results across sectors in the third quarter of this year.

But 21% of firms reported that they were less optimistic about the business environment than they were three months earlier.

This was up from 15% in the previous survey.

The chambers of commerce said uncertainty was growing "around the future trading environment with the European Union".

Although confidence remained relatively strong in most sectors, manufacturing posted its first negative score for optimism in two years, despite a broadly positive performance.

The rising cost of raw materials was cited as a growing pressure.

Investment expectations are also showing signs of slowing in some sectors, with the construction, business services, manufacturing and tourism sectors all reporting declining investment levels.

This was despite 43% of respondents reporting increased revenue, and only 17% reporting a decrease.

Only the retail sector observed a "substantive increase" in investment during the quarter, according to the survey.

Neil Amner, chairman of the Scottish Chambers of Commerce Economic Advisory Group, said: "Our survey results for the third quarter of 2018 suggest that the Scottish economy continues to be resilient, but firms are becoming cautious as uncertainty grows around the future trading environment with the European Union."

The Fraser of Allander Institute, which contributed to the report, said it continued to remain "cautiously optimistic" about the outlook for the Scottish economy this year and next.

However, it added that much depended on a "broad-based agreement being secured between the UK and the EU which supports continued close economic integration post-March 2019".

Institute director Prof Graeme Roy added: "Most economists have argued that a 'hard Brexit' will act as a significant drag on Scotland's - and the UK's - economic potential.

"However, it is the risk of a 'no-deal' scenario that is of most concern in the immediate term.

"Whether you agree or disagree with the decision to leave the EU the need for an orderly transition is vital.

"Sleepwalking into a 'no-deal' outcome cannot be viewed as an effective economic plan."