The three months to the end of February revealed that the global credit crunch has not drastically affected the Scottish economy, according to Lloyds TSB Scotland.

The report said that business expectations for the next six months have improved and there is no evidence of restriction in credit or rising levels of concern about credit costs in the coming half-year in Scotland.

According to Lloyds, the slowdown is affecting both manufacturing and services businesses, with the former reporting a net balance of 5% and the latter 9%. In contrast, expectations of increasing turnover in the next six months have improved, rising to 23%, up on the 17% of the previous quarter. With a net balance of 26% for production businesses compared with 21% of services, there is a higher level of optimism in the manufacturing sector.

Professor Donald MacRae, chief economist of Lloyds TSB Scotland, said consumer confidence in Scotland had remained robust, backed up by recent figures showing strong retail sales. He said: “Scottish economic growth is slowing from the latest annual underlying growth rate of 2.1%. Claimant unemployment at 2.5% is the lowest for 33 years. House prices in Scotland continue to increase year-on-year but at a reduced rate.
“Although this business monitor has recorded a slowing in the Scottish economy at the end of last year and the beginning of 2008, business expectations for the next six months have improved. There is no evidence of restriction in credit or rising levels of concern about credit costs. Costs overall are, however, a concern for most Scottish businesses.”