Page last updated at 16:42 GMT, Tuesday, 20 January 2009

Economic survey 'bleakest ever'

A food factory announces 150 jobs cuts as businesses warn of a bleak outlook

Business leaders have predicted a bleak outlook for the Scottish economy unless it becomes easier to get credit.

The Scottish Chambers of Commerce gave the warning as its quarterly business survey showed the "most depressed" results in its 25 year history.

The survey found 60% of all respondents were less confident about what the business situation would be at the end of 2009.

This was the highest proportion ever recorded in the history of the survey.

The survey, conducted in conjunction with the Fraser of Allander Institute at Strathclyde University, covered the final quarter of 2008.

The results for the fourth quarter 2008 are the most depressed results recorded since the survey commenced in 1984
Cliff Lockyer
Fraser of Allander Institute
It found trading conditions had continued to deteriorate in all sectors, with 86% of firms surveyed in the construction sector reporting falling levels of new contracts.

The retail trade has also been hit by the downturn, the survey said.

The number of firms reporting declining sales increased every quarter since the end of 2007.

In this most recent survey, 67.9% of firms in the sector reported declining sales.

The survey said the fourth quarter of 2008 had seen a "significant slowing down in the Scottish economy" and further warned that expectations for the next year were "extremely weak".

Cliff Lockyer, of the Fraser of Allander Institute, said: "The results for the fourth quarter 2008 are the most depressed results recorded since the survey commenced in 1984.

"This is the first time that negative trends have been recorded for the key indicators in all sectors."

Toxic assets

Liz Cameron, the chief executive of the Scottish Chambers of Commerce, said: "The results of our latest survey underline the deteriorating state of the Scottish economy across all sectors and highlight the challenges we face in the year ahead.

"Trading conditions worsened significantly towards the end of 2008 and it is critical that credit, on reasonable terms, is available for Scottish businesses.

"Without such credit, the outlook for 2009 looks very bleak indeed."

The UK Government has unveiled plans for a new insurance scheme to limit banks' losses from so-called toxic assets.

Ms Cameron said: "New measures to insure banks against losses from toxic debt means that there should be no more excuses for a failure to lend."

She added: "Once the issue of credit is resolved, attention must turn to ensuring that Scottish businesses are operating in a supportive business environment geared towards maximising competitiveness and success as we emerge from the current recession.

"It is vital that Scotland maintains a strong skills base and that government intervention is directed towards support for our key industries."

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