Scotland's economy continues to grow, albeit not at the rate seen this time last year.  The latest Scotland Business Monitor published by Lloyds TSB shows that a net balance of +11 per cent of businesses reported an increase in turnover in the last three months.

In the latest report to the start of June, nearly one in four Scottish firms (39 per cent) said turnover was up, a third said it had stayed the same and 28 per cent reported a fall.  That's a better result than in the three months to February, but well below the growth figures reported at this time last year.

Professor Donald MacRae, chief economist, Lloyds TSB Scotland said: ""The Business Monitor has recorded a slowing in the Scottish economy while business expectations for the next six months have fallen. Concerns surrounding credit availability and the costs of credit have risen.  After above trend growth in 2007, the Scottish economy is facing reduced growth in 2008 in the range of 1.5 per cent to 1.75 per cent."

Despite the slowdown, however, Professor MacRae argued that the economy remained sound:  "Consumer confidence remains high enough to result in retail sales increasing at an annual rate of eight per cent.  Claimant unemployment at 2.6 per cent remains low while house price increases in Scotland have slowed to more realistic levels".

The report shows that the slowdown in growth is affecting services businesses more than manufacturing, although both sectors are still seeing growth.  Expectations that businesses will be able to grow turnover in the next six months have largely evaporated as companies worry about credit availability and costs.