Economy suffers body blow as manufacturing exports slump

THE economy suffered a further blow yesterday with a dramatic slump in manufacturing exports.

Latest Scottish Government figures show sales to overseas markets have fallen 2.1 per cent in the last year.

The drinks sector is a rare success story, but the Scotch Whisky Association (SWA) admitted it faced ‘major uncertainties’ following the Brexit vote.

There was better news on the High Street with retail sales up, but at a slower rate than across Great Britain as a whole, and the sector remains gloomy.

Experts blame uncertainty from Brexit for Scotland’s export woes and fear it could push the country towards recession by the end of the year.

The SWA said the loss of access to the EU’s free trade area was its biggest concern, with more than 90 per cent of Scotch whisky sold outside the UK. David Frost, chief executive, said it was reassuring that Scotch whisky will not face a tariff on exports to Europe, while in most global markets existing zero tariffs will continue, including in the US, Canada and Mexico.

But he added: ‘Scotch whisky is one of the UK’s most successful exports. We are calling on the UK Government to bring clarity to the transition to Brexit as soon as possible and ensure that the current open trading environment is not affected.

‘Finding practical ways forward on exports and on free trade agreements should be high on the agenda in the coming months.’

Andy Hall, head of corporate banking at Barclays, Central Scotland, said: ‘It was a disappointing start to the year for the manufacturing industry as a fall in new orders impacted on the overall performance in the first quarter.

‘A drop in domestic demand coupled with growing uncertainty about the outcome of the EU referendum and challenges in the oil and gas industry resulted in widespread frustration throughout the sector.’

Meanwhile, retail sales rose by 3.2 per cent in Scotland last year compared to 3.9 per cent across Britain.

Business Minister Paul Wheelhouse said: ‘These statistics remind us that Scotland’s economy continues to face substantial challenges.

‘Subdued global demand and the impact of a lower oil price environment have contributed to a drop in first quarter export volumes for companies working in several parts of the Scottish economy.’