Fears over global outlook as Scots economy slows

Donald MacRae: Export orders showed a fifth monthly fall. Picture: Contributed
Donald MacRae: Export orders showed a fifth monthly fall. Picture: Contributed
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Growth in Scotland’s economy slowed slightly last month as manufacturing output fell amid pressure from the strong pound.

The Bank of Scotland said that the services sector remained the “primary driver” of expansion as weakness in the oil and gas sector weighed on total demand.

Although today’s PMI report from the bank shows the economy grew for the third month running in June, the rate of acceleration slowed to 51.2 – down from 51.9 in May.

Chief economist Donald MacRae said: “New export orders showed a fifth consecutive monthly fall, illustrating the challenge of exporting with a strong pound. The Scottish economy continues to make a moderate recovery from the slowdown of the first quarter.”

Meanwhile, the CBI said efforts to reduce the UK economy’s reliance on the service sector risk being derailed due to a lack of skilled engineering and construction workers.

It found more than half of firms were finding it difficult to recruit staff with the necessary science, technology, engineering and maths skills, and deputy director-general Katja Hall said: “The new levy announced in the Budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs.”

The warning came as accountant BDO said business confidence had fallen to its lowest level since November 2014 amid concerns over the ongoing Greek debt crisis and a slowdown in the Chinese economy.

Martin Gill, head of BDO in Scotland, said: “We thrive by being an outward-looking economy, so to see the dynamo that is the Chinese market slowing down is clearly playing on the minds of exporters. The government must cut the tax barriers that exporters face as a priority.”