According to a gloomy report from the Scottish Chambers of Commerce (SCC), a recession is “looming” in Scotland, with business confidence hitting rock bottom.

The SCC’s quarterly survey was answered by almost 300 firms, which took place in September and the start of October.

The SCC said that the economy ad slowed down in 2008 and predicted difficult trading conditions over the next year.

Liz Cameron, the SCC’s chief executive said the real challenge was to ensure the downturn was as brief and shallow as possible. She said that developments in the international economy would be the key factor over the coming months.

It said that 53 percent of manufacturing respondents, 62 percent of the manufacturing industry, 65 percent of retailers and 74 percent of construction businesses claimed to be far less confident than at the end of June.

The survey showed that manufacturing capacity had fallen and the proportion of construction firms working below optimum levels had increased from 30 percent to 70 percent, since the last quarterly report.

Concerns over the acquisition of raw materials were cited by 82 percent of manufacturing and 73 percent of retail respondents. All sectors also reported a drop in recruitment rates, apart from manufacturing, the report found.

Ms Cameron said: “The continuing problems in the global financial sector, general slowdown in the international economy and continued price inflation are real problems for Scottish business.

“Trading conditions will be difficult over the next year, and easing the issues in the financial sector is critical to enable credit to be available for Scottish businesses.

“If the current UK initiatives are successful then there is more chance of the recession being shorter and shallower.”

She said that there are signs of weakening inflationary pressures. She believes the reduction in oil prices should transfer to reduced fuel and energy bills for businesses.

“Tax and revenue raising departments need to recognise the increased financial issues confronting businesses, spending departments need to consider how they can programme their spending to provide the maximum support for Scottish business,” she added.

“These low cost or no-cost measures by the Scottish and UK Governments could make a real difference for businesses.

“Public sector action must not become a barrier to a business’s growth or indeed survival.”

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