'Fragile' Scots economy put at risk by poor state of infrastructure

SCOTLAND'S transport network has been criticised for holding back a growth in tourism, according to an economic report published today.

While the tourism industry reported its most buoyant business confidence figures for three years, the Scottish Chambers of Commerce called on Holyrood to view investment in roads, rail and the airline business as a "key priority", despite cutbacks to public sector capital projects.

The SCC quarterly survey warns that while tourism, manufacturing and construction posted growing optimism, weak consumer confidence and rising costs were threatening Scotland's "fragile" economic recovery. One in three companies complained that poor transport infrastructure was holding back expansion.

The study, compiled in conjunction with Strathclyde University's Fraser of Allander Institute, also highlighted the impact on the high street, where many retailers are struggling to cope.

Garry Clark, the SCC's head of policy and public affairs, said: "The tourism sector has reported some of its best figures for three years, but occupancy rates are a little lower than in previous years and business demand shows little sign of improvement.

"Fortunately, domestic demand remains buoyant and there is clearly still some life in the 'staycation' market.

"The need to focus on our tourism sector is one of the reasons why we are calling for the UK government to devolve air passenger duty to the Scottish Parliament and for the Scottish Government to use this, and a new air route development fund, to boost international visitor numbers to Scotland."

Today's report also hails the continued growth of the manufacturing sector, driven by exports, but warns that firms need to turn their attention to emerging markets instead of debt- ladened European customers.

Clark added: "Many of Scotland's businesses are performing as well as they can against a challenging background of rising energy costs, inflationary pressures, weak consumer demand and a decline in living standards.

"With the impact of government spending cuts and reductions in capital expenditure still to be felt, it remains a difficult environment for business, but our hope is the encouraging start to the year can be maintained."

Finance secretary John Swinney said: "This latest business survey reinforces the need for a 'Plan B', or greater flexibility from the UK government, in order to strengthen growth and recovery across Scotland.

"With greater access to the key levers of economic growth - such as borrowing powers, corporation tax, and the Crown Estate - this (Scottish] Government can do more to support investment, create jobs, and boost Scotland's competitiveness."

Swinney also highlighted yesterday's news of an eighth consecutive quarterly fall in Scottish unemployment.