The oil and gas downturn is holding back Scotland’s economy against a background of continued overall growth, a new report says.
According to the Scottish Chambers of Commerce (SCC), which reveals the findings of its latest Quarterly Economic Indicator today, business trends were mostly positive in the three months to June 30.
SCC says the construction sector “appears to be continuing to enjoy the buoyant trade that it has experienced throughout 2014 and into this year”.
Manufacturing “looks much more positive in the second quarter of the year, with strong trends in both sales and orders”, it adds.
Retail and tourism businesses are “looking forward to a successful summer, with the tourism sector in particular looking forward to another very positive summer,” the report says.
But the sharp slump in crude prices meant the performance and outlook of businesses in the oil and gas supply chain were “noticeably below the levels reported in other service sector firms”.
“This was true of businesses not just in the north-east of Scotland but across the country, where oil and gas was the main focus of their business,” SCC chief executive Liz Cameron said last night.
She added: “It is clear that low oil prices, which have been a feature of the economy throughout 2015 are having a marked impact on Scotland’s oil and gas sector.”
SCC’s Quarterly Economic Indicator, produced in collaboration with Strathclyde University’s prestigious Fraser of Allander Institute, shows survey findings for five of Scotland’s key business sectors: Construction; financial and business services; manufacturing; retail and wholesale; and tourism.
Ms Cameron said: “Our indicator for the second quarter of 2015 points to a Scottish economy where most business trends are positive and which is establishing a pattern of reliable growth, even if it is slower than we would like.
“The main exception to this overall pattern is within the oil and gas service sector.”
SCC says Scotland’s financial and business services industry suffered its poorest quarter since being introduced to the quarterly surveys more than a year ago, and may even have contracted during the three months to June 30.
The report adds: “This is in large measure as a result of a downturn in oil and gas service sector businesses.”
SCC says low oil prices were a “significant” concern for oil and gas service sector companies within its financial and business services category, where expectations for next quarter’s sales revenues, employment levels and expenditure on investment were positive but at their lowest levels since the first quarter of last year.
It adds: “The average price of Brent crude oil per barrel has remained at low levels throughout 2015 so far.
“Long term low oil prices represent a challenge not only for the oil and gas sector and the north-east of Scotland but for every business in Scotland that makes up the supply chain.”
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