Scottish business seems increasingly optimistic about the future despite a broad based slowdown in the economy. 

According to the Lloyds TSB Scotland Business Monitor, expectations of a rise in turnover in the next six months have improved in the last three months, reversing the trend of falling expectations of the previous two quarters.  The overall balance for turnover for the next six months is +23 per cent, up on the +17 per cent of last quarter.  Manufacturing seems to be more optimistic than the services sector, but across business as a whole, optimism is broadly in line the Business Monitor's long term 10 year average.

Business confidence about the future is in contrast to reports of a slowing in growth in the last three months.  Just over a third of firms reported an increase in turnover in the last three months with a similar number reporting no change and 28 per cent reporting a decline in turnover.  That gives an overall balance of +8 per cent, down from the previous quarter and less than a third of that recorded for the same quarter one year ago.

Professor Donald MacRae, chief economist, Lloyds TSB Scotland said: "Scottish economic growth is slowing from the latest annual underlying growth rate of 2.1 per cent.  However, consumer confidence remains robust as evidenced by the latest annual increase in retail sales of 7.1 per cent.  Claimant unemployment at 2.5 per cent is the lowest for 33¼ years.

"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.  After above trend growth in 2007, the Scottish economy is facing reduced growth in 2008 nearer to its long term growth rate."