Scotland set fairer with firms north of Border more upbeat than rest of UK

SCOTLAND today brings a rare shaft of sunlight to penetrate the gathering storm clouds of economic gloom by bucking the trend in the latest survey of business optimism.

According to the Business in Britain poll, tough economic conditions have resulted in the lowest level of confidence across the United Kingdom since the survey began in 1992.

The only ray of sunshine comes from firms north of the Border, which record a more positive outlook than the rest of the UK.

According to the July business confidence index – produced by Lloyds TSB – of 1,800 UK companies the balance expecting better rather than worse order books, profits and sales for the next six months dropped from +18 per cent in January to -8 per cent for this month.

Of those questioned, just +2 per cent are expecting higher rather than lower sales in the next half year, compared to +28 per cent six months ago.

The balance of UK firms predicting higher rather than lower profits over the same period has dropped from +4 per cent to -25 per cent.

And the survey, published today, also reveals that only a balance of +6 per cent reported rising sales in the first half of 2008, rather than falling sales (from +37 per cent and +31 per cent) in the first half of the year.

Although the overall survey refers to UK firms, a breakdown of the figures shows companies in Scotland have a more optimistic outlook, with business confidence north of the Border at +2 per cent. And +8 per cent Scots firms also reported a rise in sales, against an overall UK total of +6 per cent.

Manus Fullerton, corporate and commercial director of Lloyds TSB Scotland said: "The UK as a whole is experiencing a challenging business climate.

"However, it is encouraging that Scotland appears to be weathering these difficulties better and indeed is more optimistic for the future."

Fullerton pointed to the figure of +22 per cent of Scottish businesses reporting an increase in the order books for the past six months, compared to a UK figure of just +1 per cent.

The UK survey reveals that construction and retail are the hardest hit sectors, with predicted sales at -19 per cent and -22 per cent respectively.

In the transport and communications industries, +21 per cent of firms reported an increase rather than decrease in sales, a fall of 7 per cent on January's figure of +28 per cent.

The outlook for exporting firms is less gloomy, with the balance of companies expecting higher rather than lower export orders up to December dropping only marginally from +24 per cent to +22 per cent.

The competitiveness of the pound against the euro and rising demand in emerging markets have been cited as reasons for this.

And +35 per cent of firms questioned said they would expect to sell more goods abroad over the next six months, compared with +37 per cent in the first half of 2008.