Scotland business

Scotland's economic recovery remains fragile

Eilean Donan Castle
The tourism sector reported some of its best figures for three years

Scotland's fragile economy is continuing to recover, according to a new report.

But the survey, by the Scottish Chambers of Commerce, found weak consumer confidence and said rising costs could undermine the recovery.

Covering the second quarter of 2011, the survey found several sectors of the economy performed well.

Manufacturing and tourism came top and the construction sector also reported a much improved position.

But the poll, of about 200 firms in five sectors, found declining optimism widely reported in wholesale and retail distribution.

Within manufacturing, export-led demand continued to improve, as did confidence. But concerns as to rising raw material and transport costs remained and pressures to raise prices in manufacturing were found to be widespread.

Trends in both construction and tourism were better than expected and better than the past three years.

Garry Clark, head of policy and public affairs at the Scottish Chambers of Commerce, said: "Many of Scotland's businesses are performing as well as they can against a challenging background of rising energy costs, inflationary pressures, weak consumer demand and a decline in living standards.

With the impact of government spending cuts and reductions in capital expenditure still to be felt, it remains a difficult environment for business, but our hope is that the encouraging start to the year can be maintained."

The Scottish survey was conducted in conjunction with the University of Strathclyde's Fraser of Allander Institute.

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