26 Oct 2022
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
In congratulating Rishi Sunak on his victory in becoming our next Prime Minister, the Director General of the British Chambers of Commerce Shevaun Haviland set out three challenges as priorities for what will be the third UK administration this year.
“Firstly, the Government must provide more certainty on the energy support package for businesses and quickly communicate how the system will work from April. Firms need to know what support to expect in the medium and long term.
“Secondly, they must fix the extremely tight labour market. Without the skilled people to do the jobs businesses need, the economy will stagnate.
“Thirdly, to grow the economy, Government must set out a strategy to boost our international trade and exports”.
She might easily have thrown in three more; investing in our transport and energy infrastructure to achieve our net zero goals, lifting business investment out of the ditch into which it has run or, more broadly, tackling our worryingly poor productivity record.
The outlook can feel rather depressingly bleak. Inflation is over 10%, interest rates are forecast to rise to at least 5% and according to some survey data we are already in recession. On balance it is helpful that a new government is in place so quickly after the collapse of Trussonomics but one consequence is that we know very little detail about the intentions of the Sunak administration.
As Ms Haviland stated: “We cannot afford to see any more flip-flopping on policies - the UK’s businesses need a sustainable, long-term economic plan they can believe in”.
There is a great deal that needs clarified. What will the Halloween budget statement tell us about public spending targets and tax policies? How many of the commitments previously made will be retained and what will the impact be on Scottish Government and local government budgets? Many of the projects that Glasgow Chamber of Commerce believe are important to Glasgow’s growth such as the next phase of the Scottish Events Campus and the development of our three science and technology innovation zones depend on some contribution from public sector. We would argue vigorously that now is not the time to reduce the infrastructure investment that will guarantee future growth.
In Glasgow we will also be paying close attention to the investments announced under the Levelling Up agenda. These include the announcement of the successful bidders for Scotland’s two Green Freeports and the budgets that will be made available under the Shared Prosperity Funding designed to replace European regional budgets. Will investment zones still be pursued?
Defence budgets will also be important to a city region with a very strong defence industry. Significant too will be the direction of immigration policy as a lever to ease skills bottlenecks that was such a controversial flashpoint under Truss’ government. We had been encouraged by the relaxation of rules for graduates’ post study work visas and hope that there will be further flexibility to come if economic growth is the primary concern.
In the very last face to face event Glasgow Chamber of Commerce ran with our members before the pandemic lockdown, we presented the results of a report exploring the strengths businesses can depend upon if they invest in the city.
Drawing on data from over 450 international city indices comparing various measures of economic competitiveness we know that Scottish cities have workforces with very high skill levels. We also know that our universities and colleges remain globally strong both as places to study and crucially as sources of academic research in engineering, life sciences and renewables. Our track record in attracting inward investment has been regularly reported notably in the annual EY survey of investment attractiveness. In Glasgow that has helped build an unusually large financial services centre for a city of our size with a strong bias towards digital technology. We need the Sunak administration to deliver policies that build on those strengths.
This article was first published in The Herald on Wednesday 26 October 2022
