Scotland's economy in clear slowdown

AN ECONOMIC slowdown is "more evident" now in Scotland than it was three months ago, according to the latest business survey by the Scottish Chambers of Commerce (SCC).

Business confidence and demand north of the Border has taken a fresh hit in the past three months, the report revealed, painting a gloomy outlook for all sectors.

Tourism was dealt one of the heaviest blows as reduced consumer spending pushed demand to its lowest level in five years.

And the SCC has warned that factors such as high energy and transportation costs are having a "major impact" on businesses across Scotland.

The report, published today, comes just days after Royal Bank of Scotland's Purchasing Managers' Index revealed that Scottish companies are shedding jobs at the fastest rate in more than five years.

It shows that the majority of construction, retail, tourism and wholesale firms reported lower levels of business optimism, while more than 45 per cent of manufacturing respondents also noted a downturn.

The SCC said it was clear that the housebuilding sector was suffering particularly acutely, while in retail, independent store owners have been joined by larger chains in feeling the pinch.

Liz Cameron, chief executive of the SCC, said: "This survey clearly demonstrates that the lack of business confidence apparent in the early part of this year is now being translated into a general slowing down of the Scottish economy."

She added: "It is important to put these results into perspective. Scotland still has a positive rate of growth, employment remains robust and wage demands are steady for the moment."

Cameron pointed to robust export sales in the manufacturing sector as a bright point in the downbeat report, saying that domestic orders were being reported as level or rising by a majority of businesses.

She continued: "This survey shows that opportunities do exist for Scottish businesses, but they are having to fight harder and think smarter in order to seize them."

In the tourism sector, the net response in terms of demand was negative at -31.9, while more than 60 per cent of respondents reported lower levels of business confidence.

For retailers, a net declining trend was reported for both independents and national chains for the first time. Looking ahead, a net of -49 per cent predicted declining turnover over the coming year, while a net total of -56 per cent say their profits will be hit.

As expected following a series of gloomy reports from the construction sector north and south of the Border, builders reported a continuing downturn in domestic contracts.

But construction industry firms added that the trend in public-sector work was relatively unchanged.

Liberal Democrat finance spokesman Tavish Scott MSP added: "The Scottish Chambers of Commerce survey illustrates the devastating toll the credit crunch and rising costs is taking on Scottish business."