Scots factory sector sales pick up pace

SCOTLAND’S battered manufacturing sector is recovering as Britain’s economic prospects gather pace, according to a new report.

The report on a study of almost 2000 companies revealed that just under half saw sales increase over the three months to November, according to the Lloyds TSB Scotland 24th Business Monitor.

But it also warned that Scotland’s economic performance will continue to be overshadowed by overall UK performance.

The Lloyds TSB report coincides with a report from Amicus, one of Britain’s leading trade unions, which warned that more than half of the UK’s leading manufacturing firms expected to cut jobs this year, offering "bleak" prospects for workers. According to Amicus, 53 per cent of chief executives at the country’s top 100 manufacturing companies said they expected to make workforce cutbacks this year.

The latest Lloyds TSB monitor showed 49 per cent of 1941 Scottish manufacturing firms recorded a boost in turnover in the quarter to the end of November, with 22 per cent reporting a fall.

The overall net balance between those two groups, 27 per cent, is identical to the previous two quarters, but substantially up on the 21 per cent figure for the same three-month period at the end of 2002.

And 52 per cent of production firms reported a rise in turnover, following a difficult period in which 13 consecutive falls took place in quarterly manufacturing output up to the second quarter of 2003.

But despite the upbeat outlook, the report also warns that Scotland’s fortunes will lag those of the wider UK.

Lloyds TSB also delivered a warning over Scotland’s dependence on the public sector for economic growth, adding that Government spending will account for almost a third of net employment increases in 2004. Government spending in Scotland has already exceeded 50 per cent of gross domestic product.

Professor Donald MacRae, Lloyds TSB Scotland’s chief economist, said: "The Scottish economy will enter 2004 with positive growth, albeit below that of the UK as a whole. Prospects for 2004 are for Scottish economic growth of two per cent plus, against a UK figure of 2.8 per cent."

Business expectations for the next six months indicate continued growth in the economy, as 46 per cent of all respondents to Lloyds TSB’s report anticipate maintaining turnover levels, and a further 42 per cent predict increases.

Meanwhile, the Amicus survey indicated only about one third of chief executives expressing economic optimism, compared with half of union shop stewards who took part in the same survey.

The chief executives were also pessimistic about future spending on recruitment and training in the coming year, with one in five predicting they would spend less than last year.

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