Call for return of airline subsidies to help drive on Scottish exports

TRADE bodies have called on the Scottish Government to invest in air transport links to ensure manufacturers can continue to "rebalance" the economy and to drive growth.

The call comes on the back of new figures that show manufactured exports rebounded by 3.9 per cent in the first quarter of 2011 after a dismal second half of 2010, where overseas sales of goods made in Scotland fell. On an annual basis, export sales of Scottish goods grew 2.2 per cent.

Overall, the Scottish Government's quarterly index of manufactured exports showed exports of goods were still 7.7 per cent below their pre-recession level. David Lonsdale, assistant director of the CBI Scotland, renewed demands for the return of airline subsidies, which were axed by the SNP government in 2008.

"Greater levels of trade and business investment will be crucial if Scotland is to strike a more sustainable economic model, one which is less reliant on public spending and which instead has a far greater emphasis on private sector growth," he said.

"Government can play its part by prioritising policies which promote exports and investment. This cannot be left solely to Scottish Development International (SDI] and the enterprise networks, as wider devolved public policy has a crucial role to play.

"A more stretching national target for export growth is required, together with pump-prime funding to establish more direct air links with key overseas business destinations and hubs."

It is understood the government wants to reinstate the Route Development Fund, a 30 million pot that helped more than double the number of international flights into Scotland between 2002 and 2007, although any new fund would be required to meet European state aid rules.

Fergus Ewing, the enterprise minister, welcomed as "encouraging" the rise in manufactured exports, adding that more than 950 companies received support through SDI.

Scottish Chambers of Commerce chief executive Liz Cameron said: "The first quarter of this year was always likely to see a rebound in export growth following the severe winter, but these figures represent the best quarterly growth rate for almost four years. It is clear that much of our recovery remains export led."

Paul McLaughlin, chief executive of trade body Scotland Food & Drink, said: "Export is a key part of our strategy to grow the value of our industry to 12.5 billion by 2017."

Overseas sales of food and drink was the largest contributor to quarterly growth, up 6.1 per cent, while chemicals - which include coke, refined petroleum and nuclear fuel - grew 11 per cent. These two categories accounted for the vast part of the growth in the first three months of the year at 3.3 per cent.

Metals and metal products soared 20.7 per cent.But total volume of exports year on year in engineering industries fell 2.2 per cent, due to mainly to declines in sales of mechanical engineering products and electronics.