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Scottish economy slows but grows

26/06/2008

The Scottish economy is still growing but at a slower rate, a business survey has shown.

The latest Lloyds TSB Scotland Business Monitor shows 39 per cent of firms reporting an increase in turnover, 33 per cent reporting static turnover and 28 per cent reporting a decrease over the last quarter.

This gives a net balance of +11 per cent, up from the previous quarter but only a third of that recorded for the same quarter one year ago.

Expectations of increasing turnover in the next six months have fallen sharply, with the overall balance for turnover for the next six months nearly flat at +1 per cent, a sharp drop from the +23 per cent of last quarter.

This is the lowest level of business expectations in almost ten years, Lloyds TSB said.

The production sector is more optimistic regarding the future increase in turnover with a net balance of +7 per cent, while the service sector is more pessimistic with a net balance of -2 per cent.

Professor Donald MacRae, chief economist for Lloyds TSB Scotland said: "Although Scottish economic growth is continuing it is still at a reduced rate. However, consumer confidence remains high enough to result in retail sales increasing at an annual rate of eight per cent.

"Claimant unemployment at 2.6 per cent remains low while house price increases in Scotland have slowed to more realistic levels.

"After above trend growth in 2007, the Scottish economy is facing reduced growth in 2008 in the range of 1.5 per cent to 1.75 per cent."