Scotland business

Oil downturn 'impacting on broader Scottish economy'

Oil worker Image copyright Thinkstock
Image caption The report suggested the impact of the oil downturn looked to be extending beyond those businesses operating directly in the sector

The downturn in the oil and gas sector may be having an impact on the broader Scottish economy, according to a report.

Scottish Chambers of Commerce said the effect of falling oil prices seemed to be "extending beyond those businesses operating directly in the sector".

It attributed contraction in financial and business services to the low global market price for Brent crude.

Its latest quarterly economic report drew responses from 477 firms.

The construction and manufacturing sectors reported strong results in the fourth quarter of 2015, indicating continued growth following positive results in the previous quarter.

However, the Scottish tourism sector had mixed results, while retail and wholesale experienced a decline. Both industries overall had "considerably poorer" results, compared with the same quarter a year before.

Business optimism was lower in the fourth quarter for the majority of sectors in comparison with the same period of 2014.

The report said that could be due to concerns firms had over the impact that the Living Wage, low oil prices and business rates will have on their business.

Image copyright Thinkstock
Image caption The report suggested that the Scottish construction sector was one of the primary drivers of growth last year

Scottish Chambers of Commerce director Liz Cameron said: "Our latest economic indicator points to continued success for many businesses, but the shadow of the continued decline in global oil prices now looks to be extending beyond those businesses operating directly in the sector.

"Last year, the Scottish construction sector was one of the primary drivers of growth.

"This remained the case right up until the end of 2015 and, despite the fact that optimism in the sector is less strong than it was a year ago, prospects for employment in the sector remain positive.

"However, this is one of a number of sectors where businesses are facing skills shortages, with nearly two-thirds of businesses who were hiring having experienced difficulties in recruiting."

'Grounds for optimism'

She added: "Despite a slowdown in exports, there remain some grounds for optimism for Scotland's manufacturers, many of which recorded a broadly positive end to 2015.

"Both revenues and orders remained in positive territory but expectations are for investment to ease in the early part of 2016.

"Results for tourism have been more mixed, where the sector is markedly less optimistic than it was at the turn of 2015, and retail, where lower revenues and profitability may be a consequence of early and prolonged pre-Christmas discounting."

On Wednesday, official figures showed that Scotland's economy grew only slightly over the summer and continued to lag behind the UK as a whole.

Total output grew 0.1% between July and September - which was 1.7% higher than the same quarter last year.

By comparison, UK growth was 0.4% and 2.1%, respectively.

Earlier this week, a report by the Fraser of Allander Institute indicated that the Scottish economy slowed down towards the end of 2015.

Its analysis suggested the rate of recovery was constrained by companies in the north east.

Related Topics

More on this story