The Scottish economy is experiencing a sharp slow down according to the latest Lloyds TSB Scotland Business Monitor.

This latest survey shows more firms reporting a fall in turnover than reporting a rise.  The net balance of those reporting a contraction in their business compared to those reporting growth was -10 per cent, a complete reversal of the figures for the previous three months when the balance between those reporting a rise and those reporting a fall in turnover was + 11 per cent.

Service businesses, says Lloyds TSB Scotland, are more affected than manufacturing, although both sectors are experiencing a slowdown. The bank says that the results are the worst in the history of the Business Monitor.

Expectations of increasing turnover in the next six months have also slumped.  The overall balance for turnover for the next six months is -28 per cent, a sharp drop from the +1 per cent of the previous quarter.

Professor Donald MacRae, chief economist, Lloyds TSB Scotland said: "Scottish economic growth has slowed from the latest annual underlying rate of 2.1 per cent.  Consumer confidence remains at a level sufficient to produce retail sales increasing at an annual rate of 6.6 per cent.  Claimant unemployment at 2.8 per cent remains low.  House price increases in Scotland have avoided a major price fall so far although sales and purchases have fallen significantly.

"The Business Monitor shows the Scottish economy feeling the effects of the credit crunch with slowing output, increasing costs and falling expectations to produce the most pessimistic assessment of future prospects in 10¾ years.  After above trend growth in 2007, the Scottish economy is facing reduced growth in 2008."