Scotland's economic recovery threatened by rising costs

Those interviewed expressed concern about the rising costs of raw materials and transport

Scotland's fragile economy is under threat from rising costs, including the price of materials and transport, according to a new survey.

The Scottish Chambers of Commerce survey, covering the first quarter of 2011, suggested the Scottish economy stalled during the period.

It also found it was likely that rising costs would be passed on to customers.

The poll of about 200 firms in five sectors found expectations for the second quarter remained weak.

Business optimism continued to decline in all sectors during the first three months of 2011.

Within manufacturing, export-led demand continued to improve but was less able to offset a decline in Scottish and rest of UK orders.

Pressures to raise prices in manufacturing were at their highest for more than two years and the highest recorded in retail.

In construction, demand remained depressed with more than half of firms reporting downward trends in domestic/house building orders and more than two-thirds reported declining levels of public sector contracts.

Garry Clark, head of policy and public affairs at Scottish Chambers of Commerce, said: "Exports continue to support manufacturing activity, and this again underlines the importance of utilising Scotland's international reach to the best advantage for our businesses."

The Scottish survey was conducted in conjunction with the University of Strathclyde's Fraser of Allander Institute.