Page last updated at 00:13 GMT, Thursday, 1 April 2010 01:13 UK

Snow 'stalls' economic recovery

Motorists try to dig out vehicles from heavy snow on the A702 road south of Edinburgh
Severe weather earlier in the year could have caused the fall in turnover

A survey of Scottish businesses by the Lloyds TSB bank has found the tentative recovery from recession is stalling.

In the three months to the end of February more firms reported a fall in turnover than they had in the previous quarter.

Lloyds said the most likely explanation for the deterioration was the severe weather in early 2010.

The bank's business monitor warned there could be a delay in Scotland emerging from recession.

In the quarter to the end of February, 47% companies surveyed reported a drop in turnover while 25% said turnover had increased giving a net balance of -22%.

The bank said this figure was "significantly" down on the previous quarter and equivalent to the same period a year ago when the country was deep in recession.

The latest figures come on the back of a year of improvement and the bank warned that Scotland's exit from recession could be delayed.

Great expectations

Prof Donald MacRae, chief economist of Lloyds Banking Group Scotland, said: "Hopes were high for a definite exit from recession and a vigorous recovery.

"However, this latest quarter shows a setback. It is unclear whether this is a one-off weather-induced effect or a more persistent slowdown."

The Lloyds TSB Scotland Business Monitor found manufacturing firms faring worse than those in the service sector.

This may mean that overall growth in the Scottish economy will be less severely affected since services account for a bigger share of the economy than manufacturing.

The bank said that despite the negative experience of the last quarter many companies were still optimistic of the future, expecting turnover to increase in the next six months.

Expectations for a rise in export activity were particularly high with a third of firms predicting an increase and 18% expecting it to fall.

Prof MacRae said: "The persistence of positive expectations points to the recovery being delayed rather than terminated."



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