The latest CBI Scotland Industrial Trends Survey shows that exports are wilting as concerns grow over economic and political conditions abroad. The survey expresses fears that the sustained growth in Scottish manufacturing export orders over recent years is expected to come to a halt over the coming quarter as a result.
After seven consecutive quarters of growth, export orders are expected to contract in the coming three months – and at their fastest pace for four-and-a-half years. It comes as firms report that concerns over political and economic conditions overseas have risen and are now at their fifth-highest quarterly level in ten years.
The quarterly survey includes sectors such as textiles, chemicals, food and drink, metals and metals manufacturing, and mechanical, instrument, electrical and vehicle engineering. New domestic orders in the three months to October remained negative for a second successive quarter, with expectations for the next three months the poorest since April 2009.
Scottish industry reported another rise in average unit costs, albeit less strong than in the previous two quarters, but without being able to pass this on in the form of higher domestic prices. The average price of oil was $104.96 per barrel during this latest survey period, compared to $113.73 previously.
Confidence over the general business situation and over export prospects for the year ahead remains becalmed, with the latter at its weakest since July 2009. This led Iain McMillan, director of CBI Scotland, to comment that this was “an undoubtedly disappointing set of survey results. Worries over the problems in the Eurozone, the sustainability of sovereign debts more widely and the political will to deal with them, have grown, making conditions for our manufacturing exporters more challenging.
“While our exporters have more headwinds to battle against, we do think there are things that government here can do to help. That is why we continue to argue that the Scottish government’s spending plans should be improved in order to better galvanise growth. A far bolder approach to making savings is required, in order to release monies for further investment in infrastructure and support for exporters.
“Similarly, the decision to block extra runway capacity at Heathrow and Gatwick has raised questions over the UK government’s commitment and strategy for helping Scottish firms export and expand abroad. If we are to see a re-balancing of our economy towards investment and exports then it is important that firms are able to access London’s key interlining airports in order to target key overseas markets or service foreign-based customers.”
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