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Growth continues at slower pace

Scots exports hit by ‘stagnant’ eurozone economies

The weakening eurozone is causing a slowdown in exports for Scottish companies, according to the latest data.

While the Scottish economy continues to grow at pre-recession levels, the pace of recovery has eased since spring and summer.

More companies have seen an increase in turnover in the last three months, the fifth best result in seven years.

But the Business Monitor from Bank of Scotland says that a  recovery in export activity in the previous three surveys has come to a halt with the overall net balance for export activity at -4%. This is well down on the +13% of the previous quarter but higher than the -14% of the same quarter one year ago.

“Exporting is proving a challenge in the face of stagnant Eurozone economies,” says the surveys authors.

“Firms’ assessment of their immediate prospects in the next six months was on a rising trend throughout 2013 and reached highs in the first two quarters of this year. These gains have been partially reversed in the latest quarter but still show expectations close to the high levels evident pre-recession. This is the eighth successive Business Monitor showing a positive net balance for turnover expectations – the most optimistic sequence of results in seven years.”

There is also more confidence over increasing turnover. Expectations for turnover in the next six months ending May this year are showing an overall net balance of +19%. This is marginally down on the +21% of the previous quarter but up on the +16% of the same quarter one year ago.

In the summer Business Monitor, expectations for future export activity reached the second highest level in the sixteen and three quarter years of the Business Monitor. The latest net balance for export activity for the next six months has plunged downwards.

The net balance reached +5% – well down on the +32% of last quarter and the +21% of the same quarter one year ago. An increase in uncertainty and a slowing world economy have taken their toll of firms’ assessment of export prospects.

Donald MacRae, chief economist, Bank of Scotland said: “The surge in economic activity identified in summer 2013 has been maintained throughout 2014. Expectations have fallen slightly but are close to pre-recession levels, suggesting the recovery will continue into 2015 but the rate of growth will ease. Further increases in investment by firms would enhance and embed the recovery.”

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