Scottish business growth grinds to a halt


Latest RBS Scottish Business Monitor reveals a slowdown across most of the country except Edinburgh which was boosted by the financial services sector

Business growth in Scotland stalled in the first quarter of 2018, according to a report published today (MON) by the Royal Bank of Scotland.

The bank’s latest Scottish Business Monitor report revealed a slowdown across most of the country with the exception of the Edinburgh area which was boosted by the financial services sector.

Export growth continues to slide with capital spend also reducing across the country, according to the report produced by the Fraser of Allander Institute .

However, despite the weak start to the year firms expect a strong rebound over the next six months.

The latest figures show that the country has experienced the weakest volume of business in two years.
The survey of more than 400 Scottish businesses reveals that a third (32%) of firms said turnover rose in the three months to March. Thirty two per cent reported that turnover fell. The balance, +0%, compares with +10% in the final quarter of 2017.
Firms in production industries report a modest rise in turnover (+3%) while a small balance of service firms report that sales fell (-2%).

In total, 16% of firms expect sales to grow in the six months to September, with a stronger rebound in services (+20%) than in production (+8%).

One in six (16%) of exporters reported that export activity rose in the three months to March, with one in five (21%) reporting a decline. The balance, -5%, compared with +13% in Q4 2017 and is the first decline since late 2016. Exports declined in both services (-5%) and production (-7%). However 7% of firms expect export activity to rise in the six months to September.

Professor Graeme Roy, Director of the Fraser of Allander Institute, said: “Following a challenging 2017, this first Scottish Business Monitor of the year shows that the Scottish economy continues to face challenging trading conditions.

“Firms in the survey reported a slowdown in some key trends but businesses expect many of these trends to pick up during the remainder of 2018. For example, the survey finds that export activity unexpectedly fell, however on balance firms expect export activity to grow over the coming 6 months.

Sebastian Burnside, chief economist with RBS, said: “Scottish businesses are eagerly anticipating an end to the squeeze on household finances.
“Inflation was still eating away at people's pay packets in the first quarter of this year, leading to businesses reporting stable revenues. But looking forward there's confidence that demand will pick up as price pressures start to ease.”

Source : Insider 

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