SCOTTISH manufacturers have suffered their sharpest drop in confidence for more than four years, a survey conducted following the UK’s vote to leave the European Union has revealed.
This tumble in optimism occurred at the end of a three-month period in which the Scottish manufacturing sector achieved a rebound in new orders and output volumes, the survey from the Confederation of British Industry shows.
Scottish manufacturers recorded stronger growth of domestic orders and output volumes than their counterparts in other parts of the UK, having suffered sharp drops in the three months to April.
However, in the survey conducted between June 27 and July 13, only 17 per cent of Scottish manufacturers said they were more optimistic about the general business situation than three months earlier and 45 per cent said they were less confident. The balance of 28 per cent reporting a decline in optimism signalled the sharpest drop in confidence since April 2013.
CBI chief economist Rain Newton-Smith said: “Scottish manufacturers picked up the pace over the second quarter, with orders and output growing more quickly than across the UK as a whole.
“However, the signs are that the Scottish manufacturing recovery may be short-lived due to the cloud of uncertainty hovering over industry following the EU referendum. We see this in falling optimism and lacklustre investment plans.”
Noting Scottish Government figures showing gross domestic product in the opening quarter of 2016 was flat, compared with the final three months of last year, Ms Newton-Smith added: “This comes after last week’s GDP figures, which suggested Scotland’s wider economic growth had stalled well before the referendum.”
In the UK as a whole, the drop in confidence among manufacturers was even steeper, with 52 per cent saying they were less optimistic than three months earlier and only five per cent reporting a rise in confidence. This signalled the sharpest drop in UK manufacturing optimism since January 2009.
A balance of four per cent of Scottish manufacturers reported a rise in employment in the three months to July.
However, manufacturers north of the Border forecast falls in new orders, output and employment in the coming three months.
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