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Weak Sterling offers Scottish export boost but growth remains fragile

Latest Royal Bank of Scotland Scottish Business Monitor shows weak pound offering some comfort to country’s exporters and tourism sector.

A weak pound buoyed Scotland’s production and tourism sectors, boosting visitor numbers to the country and driving exports – leading to the first positive swing in export numbers in two years.

The findings also reveal:

  • Exports grow for first time in two years during Q2 of 2017;
  • Businesses confident that growth will rise during remainder of 2017 despite a modest three months to June;
  • Cost pressures remain strong suggesting higher consumer price inflation to come;
  • Capital investment continues to fall and likely to do so for rest of year.

Stephen Boyle, Chief Economist at Royal Bank of Scotland, said: “Scotland’s economy continued to grow in the second quarter, albeit very modestly. More encouraging is the outlook, with a greater proportion of businesses expecting higher levels of activity in the second half of the year. Inflationary pressures remain strong and, with wage growth weak, households will be under pressure; consumer-facing sectors will see a further weakening in demand. Prompted by the weaker pound and stronger growth in the euro are, the return of export growth is welcome but falling business investment is a concern for longer-term growth prospects.”

Professor Graeme Roy, Director of the Fraser of Allander Institute, which conducted the survey, added: “These latest figures from the Scottish Business Monitor indicate that Scottish businesses are remaining resilient in the face of challenging trading conditions. Businesses reported a further improvement in activity, although levels of growth remain relatively fragile. Inflationary pressures are an increasing concern but the fall in the value of Sterling is providing a welcome boost for Scotland’s tourism sector and exporters.”

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