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RISING COST PRESSURES THREATEN THE FRAGILE ECONOMIC RECOVERY IN 2011

[ 14-04-2011 ]

Scottish Chambers of Commerce (SCC) have today (Thursday) released their Business Survey results for the first quarter of 2011.  The survey, conducted in conjunction with the University of Strathclyde’s Fraser of Allander Institute, raises concerns as to the effects of rising costs pressures on Scottish business.  In the midst of a Scottish Parliamentary election campaign, SCC has also called for a responsible approach by government towards business in the post-election period.
 
Garry Clark, Head of Policy and Public Affairs at Scottish Chambers of Commerce, said:
 
 “Our survey of firms across Scotland shows clearly the impact of rising material, transport and other costs on both current activity and for the year ahead and these will undoubtedly threaten the fragile economic recovery in 2011.  Despite the welcome news this week that CPI and RPI inflation have dropped back slightly, it is clear that there is an increasing pressure on margins and prices from rising raw material, energy and transportation costs.  It is increasingly likely that costs will have to be passed on to customers and consumers, adding to inflationary pressures in the second half of 2011.  
 
“Exports continue to support manufacturing activity, and this again underlines the importance of utilising Scotland’s international reach to the best advantage for our businesses.  The decline in construction activity appears to have bottomed out, but it is far to early to speak of any recovery in the sector.   Similarly, tourism now expects a better second quarter than last year. The retail sector appears particularly gloomy and under pressure, with trends in sales at their lowest levels for more than six years. 
 
“The current climate of uncertainty is a barrier to economic growth. We are still uncertain as to the extent and pace of public sector spending cuts, public sector employees are uncertain as to their job security and consumers are uncertain to the future and how to best plan to cope with inflation. Scotland needs our politicians to take some hard decisions once the shape of our next Scottish Government has been determined, to reduce this uncertainty and enable business and consumers to plan for the future.  They must cast aside party political blinkers and put the growth of Scotland’s economy first in terms of every action taken over the next five years.  Politicians cannot create jobs; that is the role of business.  With the right environment in terms of taxes, infrastructure, regulation and skills provision, our members are ready to grow, creating revenue and employment.
 
“The recovery is down to business, but the environment for growth will be aided by less uncertainty and more responsible stewardship.”

Click here for a copy of the Q1 results.
 

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