2012: A Further Difficult Year in Prospect for Scottish Business


23rd January 2012

Scottish Chambers of Commerce (SCC) have released their Business Survey results for the fourth quarter of 2011.  The survey, conducted in conjunction with the University of Strathclyde's Fraser of Allander Institute, reports a slowing down in activity in the Scottish economy in the second half of 2011 and few signs of any improvement in 2012.

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

'Scottish business faced many challenges in 2011 and these will remain and pose difficulties for Scottish firms again through 2012.  We expect another difficult year for the economy, internationally the ongoing uncertainty surrounding the Eurozone impacts directly on the UK economy and especially on our major export markets.

'Domestically, demand continues to be weakened by employment insecurity and tightening household incomes.  Consumers are spending less and prioritising their expenditure, with the consequences feeding through both the manufacturing and service sectors.  It is important to boost domestic demand for manufacturing given the likely volatility in our established international markets.

'The decline in construction orders has not been as bad as expected, and this may reflect a late surge in demand following the stormy weather across December and early January.  Adverse weather has proved to be a catalyst for improved or deferred demand in the sector across each of the past three years, but this offers little comfort for future expectations.

'In the retail sector 80% of respondents reported weakening sales and over 75% are expecting further falls in sales in the first quarter of 2012.  This is a crucial period for the retail sector and for the viability of many businesses.  Large multiple retailers are competing for market share and small independents continue to find the going tough.  We have already seen a further wave of retail closures and the threat of more empty shops on our High Streets is real.

In tourism, domestic and UK visitor numbers continue to look good but this is underpinned by discounting, and spend in restaurants/bars and on functions is weaker.

'In the midst of the current political debate in Scotland, it is crucial that all our politicians keep their eyes on the economy as the number one priority.  2012 will be a vital year for Scottish business and our future prosperity and it is important to focus strongly on developing the economy and improving infrastructure.'

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