Scotland’s economy gathering momentum - report

SCOTLAND’S economy is continuing to gather momentum, with businesses reporting the strongest rise in turnover for the past six years, a key report today shows.

Businesses are reporting the strongest rise in turnover for the past six years. Picture: TSPL

The research also reveals that expectations are high for the coming six months, adding to recent evidence of increasing activity levels.

Taken together, suggestions are that the country’s private sector will continue to grow in the second half of the year.

Sign up to our daily newsletter

The i newsletter cut through the noise

Today’s quarterly business monitor, produced by the Bank of Scotland, found that during the three months to the end of August, 45 per cent of firms reported a rise in turnover versus just 22 per cent reporting a decrease.

The net balance of +23 compares to -8 in the second quarter and -3 during the same period a year earlier, and returns the net balance figure to pre-recession levels of 2007.

Production and services businesses alike showed similar improvements in performance as repeat and new business volumes surged. Firms’ assessment of their immediate prospects also rose for the third consecutive quarter.

The only negative trend was in exports, with activity down marginally and expectations decreasing.

Bank of Scotland chief economist Donald MacRae said the results bore out the tentative rise in business confidence identified in the previous business monitor, when firms reported a brightening outlook despite a virtually flat second-quarter performance.

“The summer months have seen a surge in economic activity to pre-recession levels accompanied by rising business expectations for the remainder of the year,” he said.

“If it continues through to December the Scottish economy should record a year of growth in 2013.”

MacRae continued to push the case for increased investment by businesses, saying this would “enhance” consolidation of the recovery. He made an almost identical call earlier this month when the bank’s monthly purchasing managers index (PMI) report into the private sector revealed a sharp increase in business activity and employment levels.

Others have reported similarly upbeat findings in recent weeks, including a survey earlier this month from Santander which found that smaller Scottish businesses are less worried about survival and more focused on growth than a year ago.

Today’s report shows a net balance of turnover of +22 for services businesses, up from -10 the previous quarter. The production sector recorded an even stronger balance of +24, versus -5 previously. Volumes of repeat business rose strongly with a net balance of +10 against -7.

Finance secretary John Swinney said: “The Scottish Government welcomes these figures, which show that the Scottish economy continued to strengthen over the three months to August.

“These positive results follow recent labour market and GDP [gross domestic product] figures which show Scotland is outperforming the UK in terms of employment and growth.”