Strong eurozone exports helped Scottish business

Half of firms reported a turnover increase, 33% remained static and 17% suffered a fall, according to a survey by Lloyds TSB Scotland.

The figures covered the three months ending August 2004.

However, prospects for next year were described as "challenging" with a predicted drop in the growth of the economy north of the border.

In a reversal of recent trends, more production than service businesses reported increasing turnover.

Growth prospects continue to improve in the eurozone economies, which remain the destination of the majority of Scottish exports Professor Donald MacRae Lloyds TSB Scotland economist

Although figures indicated a slowdown in the rate of growth of services, the results confirmed continued growth in both sectors.

Expectations for the next six months have fallen slightly but remain high overall.

Forty-one per cent of firms expected their turnover to increase, 45% predicted no change and 14% were braced for a decrease.

Lloyds TSB Scotland chief economist Professor Donald MacRae said in spite of increasing oil prices and the swelling trade deficit in the USA, a pick-up in world demand was responsible for renewed growth in Scotland's production sector.

Service 'slowdown'

He said: "Growth prospects continue to improve in the eurozone economies, which remain the destination of the majority of Scottish exports.

"The rest of the UK continues to exhibit strong growth creating increasing demand for Scottish goods and services."

He added that the slowdown in the service sector was of "some concern" but overall the Scottish economy should grow by 2.5% in 2004.

He said: "Prospects for 2005, however, are more challenging.