SCOTTISH Chambers of Commerce has declared that its latest economic survey, which shows much weaker manufacturing growth and declining confidence among services firms, is an “amber warning light” for the UK and Scottish Governments.
The business organisation, publishing the survey today, also highlights the continuing impact of the oil and gas sector’s troubles on the broader economy north of the Border.
Scottish Chambers’ survey comes at a time when many economic indicators have been signalling the recovery in the UK as a whole, as well as that north of the Border, has been losing significant momentum amid continuing austerity.
Figures published earlier this week by the Office for National Statistics showed that UK economic growth slowed to a significantly below-trend quarterly pace of 0.5 per cent in the three months to September.
And the data showed UK manufacturing output had fallen for a third consecutive quarter, in contrast to Chancellor George Osborne’s vision of “a Britain carried aloft by the march of the makers”.
Scottish Chambers’ survey, conducted by Strathclyde University’s Fraser of Allander Institute, flags a sharp slowdown in investment growth in the manufacturing sector north of the Border. And it signals a fall in capital investment in the financial and business services sector.
On a more positive note, the survey shows that the Scottish tourism and construction sectors performed strongly in the third quarter.
However, commenting on the overall findings, Scottish Chambers chief executive Liz Cameron said: “The results of this survey should trigger an amber warning light for our Governments north and south of the Border.
“Despite another extremely positive summer for our tourism sector, there is a trend of slower growth among other parts of our economy. In addition, the apparent slowing down of investment growth in many businesses signals a direction of travel which could lead to declining levels of economic growth.”
Scottish Chambers’ survey shows that growth in both sales revenue and orders in the manufacturing sector north of the Border slowed sharply between the second and third quarters. And it signals an overall fall in profits for Scottish manufacturers.
The survey shows the first fall in optimism in the Scottish financial and business services sector for a year. It also signals that employment fell in the sector during the third quarter, although financial and business services companies’ overall sales revenue rose. Oil and gas services companies are included in this sector.
Highlighting again the impact of weaker crude prices on oil and gas services companies and the wider Scottish economy, Ms Cameron said: “There is further evidence of the continuing effects of low oil prices on the Scottish economy, with the performance of oil and gas service businesses again dampening results in the service sector.”
Scottish Chambers says: “The average price of Brent crude oil remaining low throughout 2015 is not only presenting challenges for businesses in the north-east but also businesses which make up the supply chain throughout Scotland.”
Ms Cameron said: “The picture in manufacturing is also mixed, with sales up only marginally and profitability declining.”
Scottish Chambers’ survey signals an acceleration of growth in sales revenue in the construction sector north of the Border during the third quarter. It also points to a faster pace of recruitment by construction companies in the third quarter, from an already strong rate in the preceding three months.
The survey signals that year-on-year growth in sales revenue in the Scottish tourism sector accelerated between the second and third quarters.
Ms Cameron said: “Tourism businesses reported very strong performance again in 2015, building even further on the solid platform of 2014. Events such as the Commonwealth Games and Ryder Cup seem to have succeeded as a shop window for Scotland and with new developments such as Glasgow’s SSE Hydro - now the second-busiest entertainment venue in the world - Scotland’s tourism offering is better than ever.”
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