According to the Scottish Industrial Trends Survey, published today by CBI Scotland, the anticipated weakening in activity over the next quarter combined with the expectation of further rapid cost rises has contributed to the steepest fall in business confidence for 28 years.  

The Director of CBI Scotland, Iain McMillan, called the latest results are "very disappointing." 

He said: "Until now, our industrial trends surveys have shown Scotland's manufacturing sector to have performed well over the past few years. This latest set of results, however, is very disappointing but perhaps not so surprising in the current economic climate." 

According to the survey average unit costs have risen at the fastest rate since 1980, with both domestic and export prices rising rapidly in response as firms attempt to restore profit margins.

McMillan added: "These latest results reveal that rising costs and declining demand are causing business confidence in the sector to sharply deteriorate. Hopefully these tough conditions will prove to be short-lived. However, it does reinforce the need for government, at every level, to promote policies that help build our economy and avoid policies that damage our competitiveness and the image of Scotland as a place to do business."