Scottish firms have great expectations that the economic recovery will continue in 2014 despite a sharp deterioration in export activity.
The latest Bank of Scotland Business Monitor confirmed that the economic recovery had continued into the autumn of 2013, with this “accompanied by high expectations for the next six months”.
Bank of Scotland chief economist Donald MacRae said the Scottish economy should record a year of growth for 2013. This was set to continue in coming months, albeit he added that “the recovery would be enhanced by firms increasing investment” this year.
The survey of Scottish firms found that 37% said their turnover had increased in the three months up to the end of November 2013, with 41% reporting income as unchanged.
Just over a fifth reported a decline in turnover in the three months.
When this total is subtracted from the proportion of firms who had seen their turnover grow, it gives a net balance of +15% – the second-highest result in the last six years.
While the net balance for turnover is down from the +23% recorded in the prior quarter, it is up substantially from the same period in 2012, when it was -10%.
But the overall net balance for export activity in the three months was -14% – a deterioration from the -1% of the previous quarter and the -3% of the same quarter one year ago.
This was the most negative trend in the latest Business Monitor, the bank added.
Nevertheless, firms’ expectations for exports in the future are at almost the highest level for nine years, with 35% anticipating exports will rise in the next six months compared to 14% who are expecting a fall.
Meanwhile more than a third of firms are expecting turnover to grow in the next six months, with just a fifth expecting this to shrink.
Mr MacRae said: “The surge in economic activity identified in summer 2013 has been maintained through to autumn, with the latest quarter showing the second best result in six years.
“As a result, the Scottish economy should record a year of growth in 2013. Expectations for 2014 remain high suggesting the recovery will continue into 2014. Consolidation of the recovery would be enhanced by firms increasing investment.”