POLITICAL uncertainty is holding back business, the Royal Bank of Scotland claims.
New analysis by the lender found the private-sector economy experienced just “fractional” growth in August and is “close to stagnation”.
Order book volumes are said to have fallen into decline and the drop in workforce numbers has gathered pace since July, while inflationary pressures remain.
“Political and economic uncertainty” are said to be major factors and business confidence has weakened to the lowest level in over three years.
Across the UK, only Northern Ireland has a weaker outlook than Scotland, the bank said.
Overall sentiment is at the second lowest level since the Royal Bank of Scotland (RBS) Business Activity Index began in July 2012.
The lowest ever recorded was in the month following the Brexit referendum.
Malcolm Buchanan, chair of the Scotland Board at RBS, warned managers do not expect conditions to improve any time soon.
He said: “The Scottish private sector remained close to stagnation in August, with only fractional growth signalled by the headline Business Activity Index.
“The manufacturing sector remained the main source of weakness, although the downturn eased since July. Meanwhile, activity growth in the service sector slipped to a marginal pace.
“Latest data highlighted a fall in new orders following two months of growth, whilst further evidence spare capacity was reflected in employment as firms continued to shed jobs, with the fall in workforce numbers accelerating from July.
He continued: “Political uncertainty continued to weigh down expectations, with business confidence the weakest since July 2016. The level of positive sentiment in Scotland was the second-lowest across the 12 monitored UK areas, with only Northern Ireland holding a weaker outlook.
“Overall, the forward-looking components of the survey suggest firms are expecting further challenging times ahead.”
Firms passed on part of their higher input costs by increasing selling prices last month. The rate of output price inflation accelerated to the fastest in three months, but was “modest” overall.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here