Alarm bells as private firms hit by slowdown

‘Listen to concerns’

GROWTH in Scotland’s private sector slowed at the end of the second quarter amid mounting concerns about the economy.

Companies grew at a below-average rate last month, with the manufacturing industry suffering a slowdown, a report shows.

The figures indicate Scotland continues to suffer turbulent economic conditions, after GDP figures last week indicated the economy grew by 0.8 per cent in the first three months of the year, narrowly avoiding a recession.

Economy Secretary Keith Brown was criticised yesterday after he blamed the UK Government for all the economic challenges Scotland faces – despite Holyrood controlling most of Scotland’s economic levers.

In an astonishing attack, Mr Brown accused the Tories of increasing taxes on firms, increasing national debt and running an ‘anti-business’ agenda.

The Bank of Scotland purchasing managers’ index said there was ‘modest output growth below the survey’s historical average’ last month, while the amount of new business received by private firms expanded at the ‘weakest rate in three months’.

Researchers found that 33.1 per cent of Scots firms expect business activity to increase in the next year, compared with 34.5 per cent in May, while 11.4 per cent expect activity to reduce, compared to 9.4 per cent in May.

Fraser Sime, regional director of Bank of Scotland commercial banking, said: ‘Scotland’s private sector output growth reduced slightly at the end of the second quarter.

‘Manufacturing, which was previously a key driver behind private sector growth, softened in June. The services sector remained subdued overall and with an unchanged rate of expansion since May.

‘Business confidence fell, although to a lesser extent than the UK as a whole.’

A separate Business Trends report by accountant BDO LLP found output fell in May to hit a four-year low, raising the prospect of negative GDP growth in the second quarter.

Martin Gill, head of BDO LLP in Scotland, said: ‘Economic recovery has been reliant on consumer spending and a growing services sector.

‘For two years we have seen a fall in the performance of the services sector and a reduction in consumer spending.’

Over the past year Scot- land’s economy has grown by just 0.7 per cent, compared to 2 per cent across the UK, official GDP figures show.

However, in a BBC Scotland interview Mr Brown blamed the UK Government for Scotland’s economic challenges.

He said: ‘I’ve always said there are two governments involved in this economy, and look at what the UK Government is doing: nearly three per cent inflation, adding £100billion for every year they’ve been in power in debt, bringing in taxes like the apprenticeship levy, taxes they proposed in relation to self-employed people.

‘What would be useful would be to get the UK Government to break their cover and come out and say some of the things they should be doing in the Scottish economy, and doing what the Scottish Government are doing – getting behind Scottish businesses.

‘We are getting behind businesses in Scotland and we have got an anti-business Tory Government in London.’

Scottish Conservative economy spokesman Dean Lockhart said: ‘Keith Brown calling for the UK Government to break cover to help economic growth in Scotland is bizarre.

‘In January the UK Government published an industrial strategy covering all parts of the UK – with this strategy comes hundreds of millions of pounds of investment into the Scottish economy.

‘Keith Brown should also listen to the concerns raised by major business organisations about tax levels in Scotland.

‘The SNP has brushed aside any hope of major growth by making Scotland the highest taxed part of the UK.’