Scots economic growth 'slowing'

The Scottish economy continues to grow but at a reduced rate

Growth in the Scottish economy has slowed, according to figures from analysts at Lloyds TSB.

The bank's Business Monitor's latest report showed the Scottish economy continuing to grow in the quarter to the end of May but at a reduced rate.

The turnover of the firms surveyed showed a "significant decrease" on the same period last year.

The business monitor said the slowdown was affecting service businesses more severely than production.

It said that although both sectors were experiencing a slowdown, they both continued to grow.

Expectations of increasing turnover in the next six months have fallen sharply to the lowest levels in almost 10 years.

Credit concerns

Concerns over credit availability have now risen among service businesses to the highest level since the monitor began 10 years ago, while levels in the production sector at their highest level for five years.

Professor Donald MacRae, chief economist of Lloyds TSB Scotland, said: "Although Scottish economic growth is continuing it is still at a reduced rate.

"However, consumer confidence remains high enough to result in retail sales increasing at an annual rate of 8%.

"Claimant unemployment at 2.6% remains low while house price increases in Scotland have slowed to more realistic levels."

Professor MacRae added: "After above-trend growth in 2007, the Scottish economy is facing reduced growth in 2008 in the range of 1.5% to 1.75%."

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