SCOTTISH business leaders have said they are not surprised that the UK economy stagnated in the last quarter of 2019, with manufacturing contracting for the third quarter in a row and the service sector slowing around the General Election period.
The Office for National Statistics (ONS) said yesterday’s figures also showed the economy grew by 1.4% in 2019, marginally higher than the 1.3% recorded in 2018.
Manufacturing output fell by 1.1% after some car factories paused work in November in case Britain left the European Union without a deal on October 31.
The ONS revised up the growth figure for the third quarter of 2019 to 0.5% from its previous estimate of 0.4%.
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Head of gross domestic product (GDP) Rob Kent-Smith said: “There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.”
Colin Borland, director of devolved nations at the Federation of Small Businesses (FSB), described the statistics as “torpid”. He said: “These torpid figures will come as no surprise to Scotland’s small businesses.
“Years of political uncertainty, rising costs and cautious customers have combined to make trading tough. The result has been a lack of confidence, rising spare capacity and depressed hiring intentions.
“The UK Government can act, for example by delivering a post-EU immigration system that works for businesses of all sizes and by bringing an end to the debilitating impact of late payments, which almost doubled to £20 billion last year. All eyes will now be on next month’s UK Budget to see what the Chancellor delivers for small firms.
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“At Holyrood, where we saw common sense on business rates prevail last week, the Scottish Government should focus on moves to rejuvenate our towns and high streets, get more empty units back into use and support the growth potential of our migrant entrepreneurs.”
Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce (SCC), added: “Despite breaking the Brexit deadlock in Westminster, a faltering global economy and a challenging domestic business environment could continue to limit our growth prospects – particularly if the lack of clarity over post-transition trading arrangements persists. Our businesses need much more certainty over future trading arrangements.
“The upcoming Budget must take swift and tangible steps to boost growth, productivity and confidence across the whole of the UK, including incentives to release investment and easing upfront business costs.”
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