Blog: Scotland’s CEOs demonstrate resilience as they face a new norm – uncertainty

Catherine Burnet

Speak to almost any business leader in Scotland today, and Brexit will inevitably come up in conversation.

October has now become the target date for the UK’s exit from the European Union, but the business community has developed a natural scepticism about developing a business strategy focused on any specific timeframe or wider political outlook. Businesses like certainty. We plan in years, not months, or weeks. Facing an unprecedented period of ambiguity – from Brexit to emerging technology, and climate change to fragile economic conditions - creates a raft of challenges, ultimately putting pressure on investment and long-term growth planning.

This week, business leaders from across the UK met in London to discuss the 2019 KPMG CEO Outlook. The report provides a comprehensive analysis of where we are right now, and the extent of the ambition and challenges facing board rooms around the country.

Reassuringly, 87 per cent of UK business leaders told us they were confident about their prospects over the next three years. However, in a sign of growing international uncertainty, fewer than half said they have confidence in the prospects for global economic growth in the same period. That statistic represents a significant fall of 34 percentage points year-on-year, and really demonstrates the frustrations and fears facing companies as they try to make sense of what lies ahead. With Scotland relying on the success and collaboration of global markets more than ever before, this sentiment could have real impact.

Key data coming out over the last few weeks have shown a difficult picture for Scotland for the Scottish economy, nevertheless there are some grounds for cautious optimism. A concerted focus on driving up exports from Scotland has placed the country in a strong position to ride out future challenges. Latest figures from the Department for International Trade reveal that in the first three months of 2019, almost 5,000 Scotland-based firms sold their services or products to overseas markets – an increase of 229 from the same period last year. Meanwhile, our traditionally buoyant whisky market continues to shore up a relentlessly successful food and drink industry, with exports now worth up to £4.4bn, and our oil and gas sector is emerging from a lengthy downturn, more resilient and focused on growth than ever before.

Our CEO findings, perhaps unsurprisingly, reveal investor sentiment in Europe is down, with the majority of CEOs in the EU’s most important economies, including the Netherlands, Germany and France, telling us they’re less likely to invest in the United Kingdom post-Brexit. But, Chief Executives from some of the world’s biggest economies, including Scotland’s largest single country export market – the US, China and Japan revealed they’re now more likely to invest in Britain after our departure from the European Union, offering some hope to political and business leaders looking to build new trade ties globally.

The complex range of views from CEOs across the world reflects the nuanced, uncertain period facing Scotland, and the rest of the UK, right now. We simply can’t afford to watch and wait. Now is the time to focus on how we transform our economy to better reflect the macroeconomic picture, including better Brexit planning, but also investigating the chronic challenges that have previously held back growth, including productivity – an area KPMG is currently working with CBI Scotland and the Fraser of Allander Institute to address. Our report, which we’ll publish in September, is looking beyond simply identifying a problem, and exploring some workable solutions to tackle one of Scotland’s biggest growth blockers.

The coming months and years could present an unprecedented period of disruption, but change can also bring opportunity, and with the right collaboration and a focus on resilience and planning, Scotland’s economy can continue to grow and innovate.