Scottish business confidence dips as double-dip recession fear looms
SCOTLAND now looks likely to join the rest of the UK in a double-dip recession as a key survey published today shows businesses struggling to build a sustainable recovery.
UK-wide figures from the British Chambers of Commerce (BCC) show firms growing at a “sluggish and inadequate” pace, while Scottish data reveals a sharp differential between the relatively buoyant manufacturing businesses and a more pessimistic service sector.
Liz Cameron, chief executive of the Scottish Chambers of Commerce (SCC), said: “It now looks increasingly likely that Scotland may be about to follow the rest of the UK into a technical double-dip recession, despite the encouraging reports we have been receiving from businesses in the first half of this year.
“This underlines the need for a diverse economy in Scotland as we move away from a reliance on the public sector in terms of securing Scottish economic growth.”
A report last week from Lloyds TSB suggested that Scotland had been avoiding the double-dip recession which has afflicted the UK as a whole, although its economy was stagnant.
UK economic output is now thought to have dropped by 0.4 per cent at the end of 2011 and a further 0.3 per cent in the first three months of this year.
Economists fear that the extra bank holiday for the Queen’s Jubilee makes it unlikely that the UK will have returned to growth in the second quarter.
The BCC’s economic survey for the second quarter of 2012 suggests British businesses are growing, but confidence across most measures has yet to return to pre-recession levels and it notes that the expansion was too weak to be sustainable in the current climate.
The survey of more than 7,800 businesses shows that, while more respondents reported growth than contraction, the positive reading was below levels seen before the recession of 2009.
However, the survey also shows that there has been a strong improvement in exporting activity, suggesting that businesses are looking to foreign markets as a source of growth.
BCC director general John Longworth called on the UK government to take a “bold and imaginative approach” to boosting growth. He recommended measures including the creation of a state-backed business bank, and investment in infrastructure as critical to get the economy growing. “Economic growth should be the government’s main priority,” he said. “As the eurozone crisis rumbles on, businesses are feeling the effects, and so growth is still weak.
Cameron said the Scottish government’s attempts to maximise capital investment were welcome, and urged Westminster to follow suit.
The BCC says the UK government could attract private investment in rail, air, maritime, energy and digital networks by kick-starting projects and selling them on to pensions groups and infrastructure funds.
Today’s survey also revealed that, as cost pressures from raw materials eased, fewer firms were now looking to raise prices.
The SCC is taking an in depth look at the survey data and will publish its own quarterly business report next week, which is expected to provide a clearer picture of where the Scottish economy stands.
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Thursday 20 June 2013
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