THERE is scope for both worry and hope in Royal Bank of Scotland’s latest quarterly business monitor.
The rear-view picture is disappointing, with growth north of the Border appearing to have ground to a halt in the first quarter. Extreme winter weather looks to have had some impact, but that is highly unlikely to be the only factor.
A fall in Scottish companies’ export activity in the first quarter – the first decline since late 2016 – is a significant disappointment. And so is the decline in capital investment.
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The indications are that East Central Scotland enjoyed growth in the first quarter, buoyed by the Edinburgh financial sector, but that other parts of the country saw near-stagnation or decline.
In contrast, the forward-looking projections are much more positive, although not on the capital investment or inflationary front.
If Scottish companies’ projections of growth in the coming six months come to fruition, we could see the sharpest rise in business volumes since 2014. And export activity is forecast to rebound, albeit more modestly than overall business volumes.
We should not underestimate the scale of the challenges presented by broad UK economic weakness and the protracted drag of Brexit.
However, something which suggests Scottish companies’ more upbeat forward-looking view might be justified is that they recorded a rise in new business volumes in the first quarter, albeit a slower increase than in the previous three months.
At least there is room for hope that we will see a return to solid growth in activity but only time will tell.
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