2012: Some Signs of a Recovery
But Downside threats Remain

Thursday 12th April 2012

Scottish Chambers of Commerce (SCC) have today (Thursday) released their Business Survey results for the first quarter of 2012.  The survey, conducted in conjunction with the University of Strathclyde’s Fraser of Allander Institute, reports a slight improvement in activity in the Scottish economy in the first quarter of 2012, but widespread difficulties remain for Scottish businesses.

Garry Clark, Head of Policy and Public Affairs at Scottish Chambers of Commerce, said:

“Our survey suggests that Scottish businesses have had a better start to 2012 than to last year, led by more positive indicators in manufacturing and tourism.  Across all sectors, except retail, the trends in orders and sales are stronger than at the same time last year and outturns are generally ahead of expectations at the end of 2011.  Businesses are now more confident as to the year ahead, but confidence varies between sectors and Scottish regions.

“Scotland’s manufacturing sector now appears to have returned to modest growth after a difficult latter half of last year, with a stronger trend in new orders and high expectations returning in terms of exporting.  Importantly, our manufacturers are anticipating more positive trends in terms of both turnover and profitability.  There are fewer signs of recovery in construction and clearly here more Government support is essential to stimulate demand.

“Tourism businesses reported a better than anticipated first quarter and expectations for the year ahead are at their highest levels for four years.  Importantly, the return to a positive trend in daily rates means that the hospitality industry may be becoming less reliant on widespread discounting to fill accommodation.  However, looking behind the tourism data reveals differences between urban and rural businesses, with concerns over the cost of transport, including ferry travel, being widely cited by rural and island businesses and this could have a material effect on their ability to attract visitors over the year ahead.

“The recovery remains tentative and uncertain and Governments at both the UK and Scottish level need to act to support and encourage the recovery and to recognise that a one size fits all approach is not always appropriate and that specific measures may be required to ensure that our rural and island businesses can grow and remain competitive.  This is particularly true in terms of fuel and transport costs and, unless these are addressed, it may become more difficult for rural and island businesses to attract new customers.  On a wider level, it also underlines the need for the UK Government to consider an extension of the 5% VAT rate for tourist related businesses and to devolve Air Passenger Duty, giving the Scottish Government the opportunity to reduce this tax to a level more appropriate to Scotland’s airports and use the proceeds to invest in a new Air Route Marketing Fund, designed to boost Scotland’s direct international connectivity, making our country a more attractive destination for tourists and inward investors and facilitating new exporting opportunities.”

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