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Monday, 8 July, 2002, 05:18 GMT 06:18 UK
Scots business profits weaken
Braehead shopping centre
Consumer confidence is said to be remaining high
The profitability of companies operating in Scotland has fallen significantly in the past year, according to a study.

The average return dropped to 8.03% in the year to March compared with 9.73% over the previous 12 months, according to survey of Scottish companies by Experian.

The information technology (IT) sector has already seen hundreds of jobs shed by firms like Motorola and NEC, prompting Experian to warn that Scotland faces a "second generation of economic collapse".

Last week computer giant Hewlett-Packard announced it was making 630 staff redundant in Erskine, Renfrewshire, following its merger with Compaq.

An electronics engineer
High tech industries have fared badly recently

The new figures follow a recent report by the Fraser of Allander Institute which predicted a slowdown in economic growth as a result of the manufacturing slump in Scotland.

However, Experian's Corporate Health Check found Scotland was faring better than the UK overall, where the average return on capital fell from 10.84% to 8.37%.

The biggest losses were in the IT and telecoms sector, both of which experienced a fall-off of more than 30%.

Engineering's profitability dropped to 4.81%, a 60% slump over three years.

Report author Peter Brooker said: "Scotland has been hit by a second generation of industrial collapse; much of the new employment attracted to the region following the demise of its traditional industrial base was in the new sectors of IT and telecoms.

"The depth of the decline in profitability, combined with uncertainty over the future, has led to a dramatic fall in investment nationally."

He added: "The continuing paradox is that, while business is suffering, consumers remain confident, which has enabled the UK economy to keep growing in 2001 and in 2002."

See also:

04 Jul 02 | Scotland
03 Jul 02 | Scotland
01 Jul 02 | Scotland
08 May 02 | Scotland
17 Oct 01 | Scotland
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