Exporters struggle amid stagnant Scots economy

Business Correspondent/Personal Finance Editor

Monday 24 September 2012

THE Scottish economy's key indicators are all flashing amber, according to the latest Lloyds TSB Scotland Business Monitor, with export performance showing the biggest deterioration and sales expectations now more depressed than 12 months ago.

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SIMON BAIN

Although the bank summarises its findings as showing that the economy "continues to stagnate", almost all the monitor's indicators have taken a turn for the worse in the latest quarter.

In the three months to August, one-third of firms (33%) surveyed increased their turnover, 31% experienced static sales, and more than one-third (36%) reported a decrease.

This gave a net balance of -3%, a deterioration from the -1% of the previous quarter and the 0% of the same quarter one year ago. The overall net balance for export activity in the latest three months has crashed to 0%, from the +9% of the previous quarter and the +10% of the same quarter one year ago.Expectations for future export activity have also dropped. The latest net balance for export expectations is -3%, a fall from the +5% of the previous quarter and a significant drop from the +21% of the same quarter in 2011. "Exporters are struggling to cope with the global slowdown," the bank admits.The overall net balance for turnover for firms in the production sector was -2%, down on the +4% of the previous quarter and the 0% of the same quarter last year.Service businesses are experiencing even tougher conditions, with the overall net balance for turnover at -5%, identical to the previous quarter and down from the 0% of the same quarter a year ago.Volumes of repeat business were down slightly on the previous monitor, with a net balance of -8% this time compared to -7% in the previous quarter, but far worse than the -1% of the same period in 2011. New business showed a marked deterioration, with a net balance of -5% compared to the +4% of the previous quarter, though slightly better than the -7% a year earlier. In the previous two monitors, firms' assessment of their immediate prospects improved dramatically, but that has not been maintained. Expectations for turnover in the next six months have fallen to an overall net balance of -7%, a slump from the +3% of the previous quarter and worse even than the -5% of the same quarter last year. Production firms are slightly more optimistic, with an overall net balance of -2% for turnover for the next six months, against a gloomy -10% for services firms. Donald MacRae, chief economist at Lloyds TSB Scotland, commented: "While the Scottish economy has continued to deliver a sluggish performance over the summer, there are no signs of a relapse into deep recession. "Business confidence remains depressed and a return to more vigorous growth in the Scottish economy awaits an increase in confidence in both consumers and businesses. This in turn depends upon convincing evidence of policy initiatives to contain the eurozone sovereign debt crisis and foster growth in the eurozone and UK economies."

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Exporters struggle amid stagnant Scots economy

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