Pick-up in exports fails to quell fears

BUSINESS leaders have warned that Scotland's recovering export performance may be "difficult to sustain", despite figures showing an acceleration of growth during the spring.

• Iain McMillan: 'Overseas demand is beginning to return'

Official data yesterday showed that manufactured exports grew by 0.6 per cent in the second quarter, accelerating from 0.2 per cent growth in the first three months of the year.

The pick-up was hailed as a "welcome improvement" by CBI Scotland but the growth is still far short of the 2.9 per cent expansion raked up in the final quarter of last year.

Economists last week warned that the recovery in the UK-wide manufacturing sector may have peaked, despite figures from the Office for National Statistics showing a sixth consecutive month of growth, taking the annual rate of expansion to a near-16-year high.

Commenting on yesterday's Scottish Government data, Liz Cameron, chief executive of the Scottish Chambers of Commerce (SCC), said: "Whilst Scottish manufactured exports rose in the second quarter of this year, the SCC's quarterly business survey has shown this growth may prove to be difficult to sustain in the second half of 2010.

"Nonetheless, it is clear that our export markets are performing more strongly than the domestic market and this underlines the need for more Scottish businesses to look overseas for new trading opportunities."

Cameron highlighted the work done by the SCC's "Smart Exporter" programme in supporting businesses looking to start trading overseas.

Iain McMillan, CBI Scotland's director, said: "Overseas demand is beginning to return, but more needs to be done to help firms capitalise on the opportunities provided by the weak pound.

"If Scotland is to deliver a step change in its export performance then it is all the more important that the UK and Scottish governments use their coming spending reviews to galvanise growth.

"This means prioritising those areas which foster the economy's ability to grow and enhance competitiveness, such as infrastructure investment and export assistance."

Sectors posting a jump in exports in the second quarter included textiles, fur and leather, where growth hit 22.8 per cent, while metals and metal products increased by 15.1 per cent and wood, paper, publishing and printing rose by 6.9 per cent.Among the areas suffering a decline over the same period were food, drink and tobacco, down 4.4 per cent, and "other manufacturing" falling 6.5 per cent.

Over the course of the past year, manufactured export sales decreased by 2.5 per cent in real terms, the Scottish Government said.

Enterprise minister Jim Mather said the statistics demonstrated the "resilience of Scottish companies competing globally in what remains a volatile and challenging climate".

He added: "We recognise the importance of building on the fragile recovery that is under way and, through our economic recovery plan, are delivering practical help for our exporters."

A series of recent surveys has added weight to economists' arguments for further quantitative easing by the Bank of England in a bid to prevent a double-dip recession.

Earlier this month, data from the highly respected Chartered Institute of Purchasing and Supply purchasing managers' index showed that manufacturing growth fell to a ten-month low in September.