Scottish economy ‘at pre-recession levels’

Numbers showed up in Bank of Scotlands latest business monitor. Picture: PA

Bank of Scotland’s latest business monitor found turnover trends are showing the best results in more than seven years and firms’ expectations for the rest of the year remain at levels also comparable to 2007.

Economists concluded that last summer’s “surge” in economic activity has been maintained into the summer and autumn of this year, suggesting the recovery will continue into 2015.

Of the firms surveyed, 49 per cent reported that turnover had increased over the three months to August this year while 19 per cent experienced a decrease.

Subtracting those who had a fall in turnover from those who experienced a rise gives a net balance of +30 per cent. This improves on the “robust” +28 per cent of the previous quarter and is a “substantial improvement” on the +23 per cent of the same period a year ago.

“This is the best result in over seven years and returns the net balance figure to pre-recession levels,” the report stated.

For firms in the production sector, the net balance in the three months to the end of August was +35 per cent, up from the +24 per cent of the same quarter a year ago.

Service businesses showed a similar pattern of improvement in performance, with a net balance for turnover at +27 per cent, improved on the +22 per cent of the same quarter last year.

Volumes of repeat business remained at high levels in the latest quarter while trends in the volume of new business have been maintained, the report found.

A recovery in export activity noted in the previous two business monitors has also been maintained in the latest quarter, with the overall net balance for export activity at +13 per cent - similar to the +14 per cent of the previous quarter and well up on the -1 per cent of the same quarter a year ago.

The report further found that firms’ assessment of their immediate prospects in the next six months was on a rising trend throughout 2013 and reached highs in the first two quarters of this year.

The gain has been partially reversed in the latest quarter but is still slightly above the high levels of the second half of 2013.

“This is the seventh successive business monitor showing a positive net balance for turnover expectations - the most optimistic sequence of results since 2007,” the business monitor stated.

Firms’ expectations for the volume of new business in the next six months were “optimistic” despite being slightly down compared to the previous quarter.

The expectation levels suggest the private sector of the Scottish economy will show “vigorous growth” in autumn 2014, it stated.

Donald MacRae, chief economist at the Bank of Scotland, said: “The surge in economic activity identified in summer 2013 has been maintained into summer and autumn this year.

“Expectations have fallen slightly but are at pre-recession levels, suggesting the recovery will continue throughout 2014 and into 2015. Further increases in investment by firms would enhance the recovery.”