Latest Fraser of Allander Institute report shows slowdown in Scottish economy

The Scottish economy slowed down towards the end of 2015, according to new figures from the Fraser of Allander Institute (FAI) at the University of Strathclyde.

The analysis pointed to the dragging on the economy of companies in the north east hit by the slump in oil prices.

New business levels eased during the three months to the end of November with an overall balance of just 3 per cent, compared with 18 per cent a year ago, the data showed.

However, the FAI said it was likely this slowdown would end and recovery improve.

In the three months ending November 2015, 34 per cent of the firms surveyed in the Scottish Business Monitor reported an increased turnover, 33 per cent experienced static turnover and 33 per cent a decrease. This latest result indicates a slowing in the pace of the improving trend identified last spring.

Grant Allan, FAI deputy director, said: “Growth in the Scottish economy slowed in the final quarter of 2015, while expectations of growth have remained broadly positive.

“We await the GDP figures for the third quarter of 2015, and following only slight growth of 0.1 per cent in the second quarter, we will then learn whether growth through last year will be at the moderate levels forecast earlier in the year.”

He added: “Internationally, the US Federal Reserve’s decision to increase interest rates during December 2015 suggests their confidence in recovery. However, it remains to be seen how the US economy - a vital trading partner for Scottish non-UK exports - responds to this decision.

“Concerns about a slowdown in Chinese growth as we begin 2016 suggests ongoing weakness in the global economy. This feeds back to Scottish activity both through lower exports and a low price of oil affecting activity across the country, and particularly in the north east of Scotland.”

The survey also suggested volumes of repeat business were showing a slight decline in the latest quarter; export activity was continuing to fall; firms’ assessments of their immediate prospects in the next six months were on a rising trend throughout 2013 and reached highs in the first two quarters of 2014.

This is the 12th successive Scottish Business Monitor showing a positive net balance for turnover expectations.

These expectation levels suggest the private sector of the Scottish economy will show growth close to, but below, the trend level in the fourth quarter of 2015, and slower growth in the three months to February 2016 compared with the period to November 2015.