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Scottish recession is 'slowing'

18 June 09 00:06 GMT

The recession is continuing to "loosen its grip" on the Scottish economy, according to a business report.

The latest Lloyds TSB Scotland Business Monitor said the economy was continuing to decline but at a slower rate than in the previous quarter.

While nearly half the 429 firms surveyed reported a decrease in turnover, the figures were a slight improvement on the previous quarter.

Service businesses showed the most obvious signs of improvement.

From the end of March to the end of May, 46% of businesses reported a decrease in turnover, 29% static turnover and 25% reported an increase.

That gave a net balance (companies reporting an increase minus those reporting a decrease) of - 21%, compared with -22% in the previous quarter.

But for the service sector the net balance was -19% compared with -23% in the last survey.

Volumes of both new and repeat business had improved.

However, the turnover of production businesses fared worse than the service sector, with a net balance of -26% compared with -18% in the previous three month period. .

Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said: "Businesses continue to experience difficult conditions. However there are signs that Scotland is beginning to show signs of recovery, with the service sector leading the way."

The survey suggested that the next six months look better, though turnover is expected to remain negative for the fourth consecutive quarter.

Over the next six months 34% of businesses expect decreasing turnover, 24% expect increasing turnover and 42% expect it to remain static.

This gives a net balance of -10%, an improvement on the -28% in the previous quarter and -44% in the quarter before that.

The report said: "The Scottish economy entered recession last year. Most forward-looking indicators in the business monitor are showing an increase in expectations for the remainder of the year potentially suggesting a return to economic growth by the end of 2009.

"This business monitor shows the Scottish economy still mired in recession but showing signs of emerging from the slowdown with the services sector leading the way."

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