Survey shows recession 'looming'

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A recession is looming in Scotland, with business confidence at a record low, according to a report by the Scottish Chambers of Commerce (SCC).

Almost 300 firms responded to the quarterly survey, which was conducted in September and the start of October.

It said Scotland's economy had slowed down in 2008 and predicted difficult trading conditions over the next year.

The SCC's chief executive said the challenge was to ensure the downturn was as brief and shallow as possible.

Liz Cameron said developments in the international economy would be the key factor in the coming months.

Low cost or no-cost measures by the Scottish and UK Governments could make a real difference for businesses Liz CameronSCC chief executive Business confidence was at record weak levels, the SCC said.

It said 53% of manufacturing respondents, 62% of the tourist industry, 65% of retailers and 74% of construction respondents claimed they were less confident than at the end of June.

The survey showed that manufacturing capacity had fallen and the proportion of construction firms working below optimum levels had increased from 30% to 70%, since the last quarterly report.

Concerns over raw materials were cited by 82% of manufacturing and 73% of retail respondents.

Recruitment was lower than a year ago in all sectors, except manufacturing, the report found.

Declining consumer confidence was widespread, it said.

'Real problems'

Ms Cameron said: "The continuing problems in the global financial sector, general slowdown in the international economy and continued price inflation are real problems for Scottish business.

"Trading conditions will be difficult over the next year, and easing the issues in the financial sector is critical to enable credit to be available for Scottish businesses.

"If the current UK initiatives are successful then there is more chance of the recession being shorter and shallower."

She said there were some signs of weakening inflationary pressures and she hoped that the current declines in oil prices would be translated into reduced fuel and energy prices for business and domestic consumers.

"Tax and revenue raising departments need to recognise the increased financial issues confronting businesses, spending departments need to consider how they can programme their spending to provide the maximum support for Scottish business," she added.

"These low cost or no-cost measures by the Scottish and UK Governments could make a real difference for businesses.

"Public sector action must not become a barrier to a business's growth or indeed survival."