From high street to factory floor to hotel room, slump worsens

SCOTTISH firms have suffered deteriorating business conditions and there are few signs of an economic recovery, a report by the Scottish Chambers of Commerce claims today.

A decline in manufacturing, demand, retail, the tourism industry and construction have all been identified by the business organisation in its report on the third quarter of 2012. It also said businesses had become more cautious about their future profitability.

The organisation, which compiles its report in association with the Fraser of Allander Institute, urged the Scottish Government to rethink its decision to cut £350 million from its rail investment programme.

Earlier this year, the Edinburgh Glasgow Improvement Programme (EGIP) saw its budget cut from £1 billion to £650m – a move the body claims Scotland “simply cannot afford”.

The report showed declining retail sales in the third quarter. A survey of businesses revealed that 62 per cent reported a decline in sales (compared with 54 per cent in the previous quarter).

Looking to the future, 53 per cent expect a further decline, compared with 45 per cent in the previous quarter.

In construction, the proportion reporting working below optimum levels increased to 78.6 per cent, a rise from the

70 per cent reported in the previous quarter. Tourism occupancy, at 68 per cent, was lower than the third quarters of 2011 and 2010.

Adding further misery, the report said there had been real declines in household incomes and spending, with pay increases limited to an average of 2.2 per cent in construction, 2.95 per cent in manufacturing, 2.7 per cent in retail and 3.7 per cent in tourism.

Garry Clark, head of policy and public affairs at the Scottish Chambers of Commerce, said: “Our latest survey suggests that many Scottish businesses experienced deteriorating business conditions in the third quarter and have revised downwards their expectations for the fourth quarter and first half of 2013.

“Once again, with few exceptions, demand remains weak and inadequate, and the sense of an economy stagnating appears more widespread.

“It [the Scottish Government] urgently needs to reconsider its plans to axe £350m of investment from its project to extend the electrification of the central Scotland rail network. Scotland simply cannot afford to throw such investment opportunities away.”

Deputy First Minister Nicola Sturgeon said ministers were committed to the railway improvement programme.

She added: “The Scottish Government absolutely agrees with the call for greater infrastructure spending, which is why we have consistently argued for the UK government to come forward with additional capital spending for shovel-ready projects in Scotland.

“We are absolutely committed to the Edinburgh-Glasgow improvement programme, which represents a £650m investment in Scotland’s railway infrastructure.”