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The Scottish Economy: ‘continuing to stagnate’

The latest Scotland Business Monitor from Lloyds TSB suggests that business expectations have risen slightly despite evidence that the Scottish economy in continuing to stagnate. The quarterly survey suggests an improvement in firms’ assessment of their short-term prospects, despite almost half saying they expected turnover to remain static over the coming six months, while 23% expected it to increase.

Production companies were more optimistic about their immediate prospects than those in the service sector. Their expectations for future exports showed a marked improvement – up 16% from the -3% on the previous three months. The bank however added that its survey results for the quarter ending November 2012, suggested the economy was continuing to stagnate.

According to its chief economist, Donald MacRae, “The Scottish economy stagnated during the summer. This latest Business Monitor suggests the stagnation of the summer has continued. However, there are no definite signs of a relapse into deep recession. Despite the apparent poor performance in autumn, business expectations for 2013 have improved from a low position.”

Privately, Professor MacRae is cautiously optimistic about the overall conditions of the economy. Speaking at a private event last month, he pointed out that businesses were continuing to trade and that optimism on the ground was higher than the official figures often suggested.

He also claimed that the banks, his own in particular, had money to lend. He explained that their current savings deposits were actually too high which meant that they would welcome approaches from businesses with viable investment projects. This view is supported by anecdotal evidence from other banks, such as the Clydesdale and HSBC.

This latest survey suggests that 29% of firms expect to increase their turnover; however, 32% believe it will remain static while 39% report a decrease. Professor MacRae believes that “a return to more vigorous growth in the Scottish economy awaits a further increase in confidence in both consumers and businesses. This in turn depends upon building on policy measures to contain the eurozone sovereign debt crisis and implementing policies to restore the Eurozone and UK economies to growth.”

David Calder has been a broadcast journalist for over 30 years. Before moving to the Caledonian Mercury, he worked for the BBC (national and regional) as well as parts of ITV and the World Service. He worked for prestigious programmes such as The Money Programme, You & Yours, Today and The World at One. He spent two years making mini-documentaries for Radio 5 Live and was a regular correspondent for CBC (Radio Canada). He was a regular reporter on various news and current affairs programmes on BBC Scotland as well as producing or presenting (sometimes both) science, legal affairs and arts programmes. As well as his contributions to the Caledonian Mercury, he is also a freelance producer in Scotland for the satellite channel, Al Jazeera.