Brexit challenges 'are a mixed bag' for Highlands says accountancy firm
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BREXIT'S continuing twists and turns mean that the only certainty for the Highlands and Island economy in 2019 is uncertainty, warn Scotland's largest independent chartered accountants Johnston Carmichael.
However the firm, which employs 700 staff across 11 locations, including offices in Inverness, Elgin, and Huntly, also sees some positives in the year ahead including continuing confidence in the fishing sector and the food and drink sector continuing to build on its reputation for quality.
Johnston Carmichael chief executive Sandy Manson said: “The big imponderable is Brexit and what sort of impact the outcome of current negotiations will have on business and investment confidence and resulting activity levels.
“Whatever the outcome, there will be opportunities too, and businesses are remarkably agile and resilient in the face of such uncertainty and change. We have been gearing up our range of advisory services to assist businesses embrace the opportunities and address the challenges of 2019.
“In particular I would expect VAT and Customs Duty advice to be in increasingly high demand as the Brexit outcome becomes clearer.”
Adam Hardie, Johnston Carmichael's head of food and drink, sees the region as continuing to build on its reputation for premium produce.
“Premium food and drink remains the most attractive place to go for Scottish producers as provenance and craftsmanship continue to be key factors in consumer purchasing," he said.
"This includes craft beer which is growing substantially compared with mass brewed beer and increased demand for products with perceived health benefits such as lower alcohol content drinks and food that is ‘full-of’ rather than ‘free-from’.”
His colleague Alex Martin, the firm's head of fishing, sees 2019 as a significant year for the sector as it awaits the outcome of Brexit.
"Across the sector, fishermen would like to see a fairer share and ultimately that means full control over waters so that the UK becomes an independent coastal state," he said.
"The industry is incredibly important to our economy and Scottish fisherman are very innovative and resilient – they’ve done incredibly well over the years in adapting and creating a sustainable stock. While confidence within the sector is high, Brexit is front of mind.”
However, Brexit uncertainty appears to being having a less positive impact on confidence in the agricultural sector with farmers still unclear on what support schemes will be available after Brexit and what access they will have to overseas markets, particularly the EU.
Robin Dandie, head of agriculture, said: “The best advice for farmers is to ensure they are operating as efficiently to keep on top of costs as best they can. To achieve optimum results often involves investing for the future and until there is some certainty about what changes there will be, it is hard to make strategic decisions.”
The north's renewable energy sector will also take on increased importance over the coming months, according to Mark Stewart, head of infrastructure and renewable energy.
“Onshore wind still represents the most economic form of green energy generation," he said.
"The latest round of CfD (Contract for Differences) includes onshore wind on the Scottish islands which is a welcome boost to the market. However, the removal of feed-in tariffs from March 2019 is a retrograde step for the sector.
“We are continuing to get involved in innovative projects which will help transition the UK into a low carbon economy – whether that is using the waste product from the whisky distillation process to create green bio chemicals or exploring the viability of hydrogen to fuel ferries in Scottish waters. It’s an exciting space.”
Johnston Carmichael also notes that environmentally friendly practices are seeing firms redesigning their business models to cut out waste, but although this requires initial investment, in the longer term this has the potential to create new revenue streams and allow the businesses to become more sustainable.
There is less good news on an individual level, however, with Johnston Carmichael warning that personal insolvencies are likely to increase in 2019.
Donald McNaught, head of restructuring, said: “Consumer debt continues to rise to levels not seen since 2008 and with house price inflation continuing to outstrip average earnings, increasing numbers of individuals are expected to face financial difficulty. Any individuals experiencing debt issues should consult trained money advisors to ensure they are aware of the pros and cons of the various options.”
