International Trade

1 in 4 firms report a boost in exports, says RBS Monitor

2 min read

01 August 2018

Scottish businesses are ramping up exports despite being bombarded by the biggest cost hikes in seven years.

Figures from the latest Royal Bank of Scotland Scottish Business Monitor found that more than one in four firms enjoyed an increase in export activity in the three months to June compared to just 16% reporting a decline.

Those exporting were boosted by the weakening in the pound and the current pick-up in the global economy.

The production sector led the way during the second quarter, with a net 11% reporting an increase in export activity. However, all businesses were optimistic that the trend will continue. A net 11% expect export activity to rise over the next six months.

The RBS Monitor also revealed that more than a third of firms reported an increase in the total volume of business during the last quarter, compared to 29% who witnessed a fall in activity.

Growth was strongest in the transport and communication sectors, with a quarter reporting an increase. Manufacturing and finance and business services enjoyed a net increase of 14%. Tourism fell flat in the quarter, but is the most optimistic about the rest of the year with a third of firms expecting growth during the remainder of 2018.

Overall, businesses said they were facing a heavier cost burden as inflationary pressures continue to rise.

Of those surveyed, 62% reported that costs rose in the three months to June. Just one in 25 of firms reported that costs fell. These cost pressures – the highest since 2011 – are being felt slightly more strongly in tourism and distribution.

More firms also reported more falling capital investment than rising expenditure.

“It’s very welcome news that Scottish businesses are reporting growth so far in 2018 and appear confident that they can maintain that momentum into the second half of the year,” said Sebastian Burnside, chief economist with Royal Bank of Scotland.

“But keeping an eye out for efficiencies is as important now as it ever has been with such a wide range of sectors reporting rising cost pressures.

“Consumers have already had their incomes squeezed by higher inflation, so their ability to take much more pain is limited. Firms will have to work hard to stop rising costs eating into their margins.”