Economy still sluggish, report says

Sep 24 2012

The Scottish economy remains sluggish, according to a new report.

Just over a third (36%) of firms experienced lower turnover in the three months to August, the Lloyds TSB Scotland Business Monitor said.

A third (33%) of companies report higher turnover and 31% say turnover is static. This gives a net balance (the increase minus the decrease) of minus 3%, a slight deterioration on the minus 1% of the previous quarter.

Firms in the production sector said they fared slightly better than those in the service sector, reporting a net balance in turnover of minus 2% compared with minus 5% for services firms.

Donald MacRae, chief economist for Lloyds TSB Scotland, said: "While the Scottish economy has continued to deliver a sluggish performance over the summer, there are no signs of a relapse into deep recession.

"Business confidence remains depressed and a return to more vigorous growth in the Scottish economy awaits an increase in confidence in both consumers and businesses. This in turn depends upon convincing evidence of policy initiatives to contain the eurozone sovereign debt crisis and foster growth in the eurozone and UK economies."

The overall net balance for export activity in the three-month period is 0%, significantly worse than the 9% of the previous quarter and the 10% balance recorded in June-August last year.

A slight fall was recorded in the amount of new business, with 27% of firms reporting an increase and 32% reporting a decrease. This gives the net balance of minus 5%, compared with 4% in the previous quarter.

Predictions for the next six months are not encouraging. About three in 10 companies (29%) expect turnover to fall and just over one in five (22%) expect it to rise, while roughly half (49%) expect no change.

Production sector firms are slightly more optimistic, with an overall net balance of minus 2% for turnover in the next six months compared with a minus 10% balance for services firms.