Confidence ebbs away as global downturn hits Scots businesses

The Scottish economy weakened in the second quarter as business confidence seen at the start of the year evaporated in the face the global downturn.

Releasing its latest business survey today, the Scottish Chambers of Commerce (SCC) pointed to stagnation for at least the rest of the year and flagged up problems in the tourist industry, which is struggling against the impact of a weak euro, problems at Heathrow airport and dismal weather.

Garry Clark, head of policy and public affairs at the SCC, said: “Our latest survey suggests that many Scottish businesses have had a weaker second quarter and are more cautious as to the remainder of 2012.

“The optimism evident at the beginning of 2012 is less evident now, and the signs, both internationally and at home, are of a slowdown and return to negative growth.”

He said the construction sector remained below par despite the Scottish Government’s efforts to maintain and extend levels of capital spending.

Clark added: “In the tourism sector, the possible impact of the Olympics on tourism numbers, the recent bad weather experienced in many parts of the country, the well-publicised delays at customs at Heathrow and the relative appreciation of the pound to the euro appear to be influencing the pattern and volume of domestic and international visitors to Scotland.”

However, other recent evidence suggests the long weekend for the Queen’s Diamond Jubilee boosted visits to Scotland’s historic attractions and a global advertising campaign aimed at attracting tourists on the back of the blockbuster animation Brave claims it can boost the economy by £140 million.

The manufacturing sector continues to perform well, and exports remain a bright spot, according to today’s findings. But manufacturers are forecasting leaner times in the third quarter.

The SCC called on the UK government to “act boldly to stimulate demand” and to reduce its current focus on austerity.