Budget 'did not help' business

Budget 'did not help' business

The chancellor's recent Budget did little to help Scottish businesses, according to a new report.

The study found that business confidence continued to fall, orders and sales were weak in most sectors and fewer overseas visitors were expected to come to Scotland in the wake of the war in Iraq.

The gloomy picture came in the quarterly Scottish Chambers of Commerce Business Survey, conducted by Strathclyde University's Fraser of Allander Institute.

Bob Leitch, director of the Scottish Chambers of Commerce, said: "The Budget has done little to alleviate the burdens of tax and regulations on business.

Business confidence

"This is hardly a boost to confidence in difficult times.

"A clear task for government in 2003 is building business confidence and encouraging growth."

Almost 500 firms were questioned for the latest Fraser of Allander survey which was conducted last month.

The report was published as the Chancellor Gordon Brown toured Scotland in support of Labour's Holyrood election campaign.

Confidence and orders remain depressed in manufacturing and the slowdown in retail sales seems set to continue through the second quarter

Bob Leitch
Scottish Chambers of Commerce

Mr Leitch said that steps in the Budget to help training, investment, transport and extending the Information and Communication Technology (ICT) allowance were wiped out by the rise in National Insurance contributions which came into effect last week.

The report also notes that out-turn in orders and sales was weak in all sectors except construction during the first three months of the year and weaker than expected in manufacturing and wholesale distribution.

In the tourism sector, the first quarter trend in total demand was the weakest for several years.

Mr Leitch said: "The world events, increased costs and the reduced forecasts of economic growth make both our members and their customers very cautious as to the prospects for 2003.

"Confidence and orders remain depressed in manufacturing and the slowdown in retail sales seems set to continue through the second quarter.

Recruitment problems

"International events are again adversely affecting tourism confidence and expectations are of reduced overseas visitors in the second quarter.

"Rising demand in construction is the one positive result in our latest survey."

The report also shows that average pay increases ranged from 2.96% in manufacturing to 4.7% in retail and 5% in tourism during the first three months of 2003.

Meanwhile declining trends in employment were evident in all sectors except construction.

Despite this 60% of those firms recruiting in manufacturing, construction and retail distribution reported recruitment problems.

And in the tourism sector, 80% of respondents reported difficulties filling vacancies.