Scottish firms still expect turnover to rise

Figures suggest that, while the economy is still improving, it is now growing at a slower rate than when last measured in the autumn.

The overall economic picture is still better than at this time last year, according to experts.

However, the report highlights Scotland as continuing to underperform when compared to the UK as a whole.

The report found that more firms in Scotland expect inflation to increase over the next six months than at any time over the last seven years.

About 65% of 1,911 businesses questioned north of the border expected costs to rise, 30% said they would stay level and just 5% predicted they could go down.

The Scottish economy continues to grow, but at a rate some two thirds that of the UK Prof MacRae Lloyds TSB Scotland

The bank's business monitor said that, although 31% of Scottish firms expected turnover to rise in the next two quarters, fears over cost increases were at the highest level since 1998.

About 21% of firms reported an increase in turnover in the three months ending February, compared with 32% in the previous quarter.

However, the figures from the last quarter were still higher than the 17% measured during the same three-month period a year ago.

Professor Donald MacRae, LLoyds TSB's chief economist, said: "There is little change in expectations of either manufacturing or services for increasing competition either from established firms or new entrants.

"Fears of weakening demand have fallen slightly amongst both types of business.

"The Scottish economy continues to grow, but at a rate some two thirds that of the UK.

"Low growth in manufacturing accompanied by robust growth in construction and services should see the Scottish economy grow by 1.7% to 2.0% in 2005."