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Brief respite for manufacturing sector, but outlook remains challenging

Manufacturing output stabilised in the quarter to January, following three consecutive quarters of decline, according to the latest Confederation of British Industry (CBI) quarterly Industrial Trends Survey for Scotland.

However, output is expected to return to sharp decline in the months ahead.

The survey was conducted between 16 December and 13 January, with 28 Scottish manufacturing firms responding. It showed an overall decline in total domestic and export orders, albeit at a slower pace than the previous three quarters.

Both are expected to decline at a sharper pace next quarter.

Headcount declined more rapidly than in the previous quarter and cost pressures rose sharply, putting pressure on margins, according to the CBI data.

Growth in average unit costs is expected to pick up even further in the next three months, with expectations at their highest since April 2013.

Investment intentions for the year ahead have turned positive across the board,

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Scottish Government unveils freeport plans

Proposals have been unveiled for a new model of ‘green ports’ focused on inclusive growth, fair work practices and delivering a net zero economy.

The Scottish Government is developing plans which would adapt the UK Government’s recent freeport proposals, offering streamlined planning processes and a package of tax and customs reliefs.

The green ports would make it necessary for operators and businesses benefitting from the package of incentives to:

  • pay the real Living Wage;
  • adopt the Scottish Business Pledge;
  • commit to supporting sustainable and inclusive growth in local communities; and
  • contribute to Scotland’s just transition to net zero.

The plans were announced by Trade Minister Ivan McKee, who will hold discussions with the UK Government next week.

He said: “The reputation of freeports across the world is mixed, with concerns about deregulation and risks of criminality, tax evasion and reductions in workers’ rights raised – that is not a model

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33,000 Scottish businesses showing signs of financial distress as Covid-19 restrictions continue

The number of businesses in financial distress in Scotland is continuing to soar, with almost 33,000 experiencing early signs of distress in the final quarter of 2020.

This 30% increase compared with the same period the previous year comes as the country faces a strict lockdown which is likely to remain in place until at least February.

The latest data from business rescue and recovery specialist Begbies Traynor showed a 14% rise in those seeing ‘significant’ distress since the third quarter of 2020, slightly above the UK wide figure of a 13% increase.

In contrast, the country experienced a 40% fall in businesses experiencing ‘critical’ distress – those that have had winding up petitions or decrees totalling more than £5,000 against them – by the end of last year, compared with the same period the previous year.

There was also a 19% fall in these advanced signs of distress in

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Edinburgh is the UK city that has faced the least economic impact from Covid

Edinburgh is the UK city least impacted economically by the COVID-19 pandemic,while Glasgow is the hardest hit city in Scotland.

The latest Demos-PwC Good Growth for Cities report suggests the Scottish capital is expected to see its economy shrink by minus 9.1% in 2020, a less severe impact than in any other UK city, due to its sectoral mix and relatively low case rate.

In Glasgow, the economic decline in 2020 is expected to be minus 10.4%. By contrast, the average annual economic growth rate for cities in Scotland is minus 9.7% in 2020, better than the UK average rate of minus 11.0%.

The economic recovery profiles north and south of the Border are more similar, with Aberdeen’s economy predicted to grow by 4.1% this year, and Glasgow by 4.6%. With 3.9% growth forecast, Edinburgh will be one of the slowest cities to recover.

The Demos-PwC Good Growth for Cities

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Sir Ian Wood appointed to key body seeking to rebuild the UK economy after Covid-19 pandemic

Sir Ian Wood, Chairman of Opportunity North East and former Wood Group Chairman has joined the UK Government’s ‘Build Back Better Council’ which met for the first time yesterday.

A veteran of the energy sector, Sir Ian said he would “take this opportunity to champion the huge potential in energy growth and development and the crucial role that Scotland can play in Building Back Better.

“Whilst we must not underestimate the potential impact of the pandemic upon our region, there is cause for optimism as we begin the new year and Opportunity North East (ONE) will play its role in meeting these challenges.”

He continued: “ONE and its partners have a clear ambition to transform Aberdeen and the North East of Scotland into a globally integrated energy cluster, focused on accelerating to net zero by 2050 through developing energy transition activities.

“This includes the Energy Transition Zone, the Aberdeen

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January 2021

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