SCOTS are facing a “difficult 2017” of higher prices and lower wage growth following the collapse in the value of sterling, according to a report.
The latest Business Trends Report by accountants and business advisers BDO LLP found inflation is expected to continue over the next few months as the price of goods brought in from overseas markets adjusts to the lower value of sterling, leaving consumers with less to spend.
The inflation index in the report is at its highest level in more than three years, climbing to 102.8 in October from 102.1 in the previous month, and above the long-term trend of inflation at 100.
The lower value of sterling has also knocked business confidence, BDO said.
The company’s output index, which indicates how businesses expect to perform in the three months ahead, fell to 96.6 from 96.9.
Martin Gill, head of BDO LLP in Scotland, said: “Rapidly rising inflation is quickly going to hit the pockets of Scottish consumers, affect the profit margins of businesses and ultimately slowing the growth of the economy.
“The Nissan and Hinkley announcements are a positive start post-Brexit for the UK as a whole but the Scottish Government needs to inject greater confidence back into the Scottish economy.
“We need a positive Autumn Statement and Scottish Government Budget in December that highlights immediate investment in infrastructure to help soften the blow to both consumers and businesses, and encourage growth.”
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