Scotland’s economy continues to grow as expectations rise further
29 March 2007
The Scottish economy is continuing to grow above trend rate, according to the latest Lloyds TSB Scotland Business Monitor.
This latest edition for the three months ending February 2007 shows 47 per cent of firms surveyed reporting an increase in turnover, 34 per cent reporting static turnover and 19 per cent reporting a decrease, giving a net balance of +28 per cent, down slightly from the +34 per cent for the previous quarter but still almost three times the +11 per cent of the same quarter one year ago.
These latest results point to a continuing recovery in most of Scottish manufacturing. Mirroring the trend of the previous six months, production businesses fared better than service businesses. For the last three months, the net balance figure for turnover of production businesses was +36 per cent compared with +24 per cent for service businesses. In the previous quarter the figure for production was +39 per cent and for services +30 per cent.
Expectations for increasing turnover in the next six months have increased to their second highest level in the nine years of the Business Monitor. Service and production businesses are showing similar expectations with net balance figures of +40 per cent and +39 per cent respectively. If these expectations are realised, the manufacturing sector will continue to recover, the service sector will keep growing and the Scottish economy should grow at above trend rate.
Increasing levels of confidence are demonstrated by both types of business showing a trend decline in the importance attached to weakening demand over the next three months. However, concerns over the general rate of inflation are increasing among service businesses but remain static among production businesses.
Professor Donald MacRae, chief economist, Lloyds TSB Scotland said: “The Scottish economy continues to grow above its trend rate whilst expectations for future growth have risen to their second highest level in nine years. Despite recent increases, both the rates of interest and inflation remain at historically low levels. Consumer confidence remains high reinforced by record levels of employment. The Scottish economy should grow at around 2.3% in 2007.”
