CHALLENGES, RISKS & CHANGE

Intro: There is a sense that the unglamorous hard grind will start to bear down on the detailed practicalities of change during 2017

Following the shocks and political reverberations of 2016 it should come as no surprise that relatively few have jumped forth with confident predictions for the year ahead. Yet apprehension over the future is high as the effects of the past 12 months crystallise in the weeks and months ahead.

Identifying the reasons as to why many are fearful will not be difficult. Nonetheless, buoyant financial markets in both America and the UK over the last few days have seen record highs. Businesses are sensing opportunities under a Trump administration that is pledging a boost to federal government spending on infrastructure as well as a major overhaul to the tax code in the United States. This is likely to lead to tax cuts for households and firms alike. Here in the UK, estimates for third-quarter growth have been revised up to 0.6 per cent on quarter, while household and consumer spending has been boosted by high employment and a relatively modest growth in real incomes. Hitherto, while a notable slowdown is expected over 2017, the dire predictions of economic recession in the wake of the EU referendum vote have proved overly pessimistic and we are starting the New Year from a much firmer base than many had predicted.

But major uncertainty persists over Brexit. The calls by the Scottish Government for Scotland to remain in the Single Market, and the issue as to whether beneficial trading relationships can be established with other EU countries, are clear examples of the muddle and disarray. Whilst lack of detail is frustrating, there is a notable mood across the business world to make the best of our situation and by getting on with the job. The depreciation and fall in the value of sterling offers opportunities for UK firms to boost exports and for many firms in the food and drink sector to build a presence in overseas markets. In Scotland, our tourism and events sector, spanning hotels, hospitality and conference catering, stands to benefit.

There is a sense that the unglamorous hard grind will start to bear down on the detailed practicalities of change during 2017. The focus is likely to be upon legislative changes. However, we also face an elevated degree of geo-political risk. Recent terrorist attacks across Europe and elsewhere are indicative of the challenges facing government and the intelligence agencies.

Barbaric attacks such as those in Istanbul cannot but heighten tensions across Europe. Adding further to security precautions in many European capitals, the woes and fears that governments have across Europe for their people is becoming distinctly palpable.

Fear of further such attacks, including the use by Islamic State of chemical weapons, will undoubtedly increase public anxiety and growing voter mood of unease across Europe. The British Government has already warned that ISIS could unleash such devastating weapons on our streets. Voter discontent is also threatening to bring major election upsets in France, Germany and the Netherlands.

Meanwhile, the ever-belligerent North Korea has taken another step towards long-range nuclear strike capability. The country’s leader, Kim Jong-un, has claimed that the country is now close to testing long-range missiles capable of carrying nuclear warheads.

A febrile 2017 seems likely to pose challenges as big as anything we have faced before.