Slowdown in Scottish economy reported

The Scottish economy slowed down towards the end of 2015, according to new figures.

Fraser of Allander Institute (FAI) analysis suggested the rate of recovery was constrained by companies in the north east.

New business levels eased during the three months to the end of November with an overall balance of just 3%, compared with 18% a year ago.

FAI said it was likely this slowdown would end and recovery improve.

In the three months ending November 2015, 34% of the firms surveyed in the Scottish Business Monitor reported an increased turnover, 33% experienced static turnover and 33% a decrease. This latest result indicates a slowing in the pace of the improving trend identified last spring.

Grant Allan, FAI deputy director, said: "Growth in the Scottish economy slowed in the final quarter of 2015, while expectations of growth have remained broadly positive.

"We await the GDP figures for the third quarter of 2015, and following only slight growth of 0.1% in the second quarter, we will then learn whether growth through last year will be at the moderate levels forecast earlier in the year."

Lower exports

He added: "Internationally, the US Federal Reserve's decision to increase interest rates during December 2015 suggests their confidence in recovery. However, it remains to be seen how the US economy - a vital trading partner for Scottish non-UK exports - responds to this decision.

"Concerns about a slowdown in Chinese growth as we begin 2016 suggests ongoing weakness in the global economy. This feeds back to Scottish activity both through lower exports and a low price of oil affecting activity across the country, and particularly in the north east of Scotland."

A brief summary of some of the other findings in the survey suggested volumes of repeat business were showing a slight decline in the latest quarter; export activity was continuing to fall; firms' assessments of their immediate prospects in the next six months were on a rising trend throughout 2013 and reached highs in the first two quarters of 2014.

This is the 12th successive Scottish Business Monitor showing a positive net balance for turnover expectations.

These expectation levels suggest the private sector of the Scottish economy will show growth close to, but below, the trend level in the fourth quarter of 2015, and slower growth in the three months to February 2016 compared with the period to November 2015.