SCOTLAND’s production and tourism sectors were buoyed by a weak pound, leading to the first positive swing in export numbers in two years, according to the latest Royal Bank of Scotland Business Monitor.

However, inflationary pressures have led to rising cost for the majority of firms as capital investment continues on a downward trend, apparent since the end of 2016.

The survey, conducted by the Fraser of Allander Institute (FAI), said the drop in value of the pound has driven exports, while tourism has seen a rise in visitor numbers.

Companies across the country have reported modest growth in the three months to February, with the financial and business services and tourism enjoying above average growth.

The survey of more than 400 Scottish businesses reveals that more than a quarter (27 per cent) of businesses enjoyed an increase in export activity in the three months to June, compared with less than one in five (18 per cent) who reported a decline. The balance of nine per cent compares with a flat first quarter to the year and a balance of -16 per cent during the final quarter of 2016 and -11 per cent in Q3 — making this the first positive balance in two years.

The production sector leads the way with 21 per cent of such firms reporting an increase in exports. The least was services with three percent.

Economy Secretary Keith Brown said: “Companies across the country have reported modest growth in the three months to February, with the financial and business services and tourism sectors enjoying above average growth.

“Most companies also enjoyed increases in turnover and new orders. Businesses are optimistic that the trend will continue, with many expecting export activity to also rise over the rest of 2017.

“These encouraging economic signs mean it is more important than ever that we avoid an extreme Brexit, which threatens jobs, investment and living standards — and the Scottish Government will continue to do all we can to retain our place in the world’s biggest single market.”

Businesses are optimistic that the trend will continue, with a net six per cent expecting export activity to rise over the remainder of the year.

The Monitor revealed that around a third (34 per cent) of firms reported an increase in the total volume of business during the last quarter, compared to 28 per cent who witnessed a fall in activity. The balance of six percent represents a rise of three points since the first quarter of 2017.

Stephen Boyle, chief economist with Royal Bank of Scotland, said: “Scotland’s economy continued to grow in the second quarter, albeit very modestly.”

“More encouraging is the outlook, with a greater proportion of businesses expecting higher levels of activity in the second half of the year.

“Inflationary pressures remain strong and, with wage growth weak, households will be under pressure; consumer-facing sectors will see a further weakening in demand.”

Meanwhile, business leaders are “fed up” with Nicola Sturgeon’s quest for independence and want her to get back to her day job, according to the boss of one of Scotland’s best-known brands.

Les Montgomery, chief executive of bottled water firm Highland Spring, said the Scottish Government should be helping the Conservatives to achieve the best possible Brexit outcome.

He said: “Businesses are fed up. The Scottish Government should be getting on with the job they are there to do. Focusing on employment, investment, those kinds of things.”

“Independence isn’t the job that the Scottish Government is supposed to be doing.”

Montgomery added that British consumers were loyal to British products, though this could be under threat were Scotland to separate.

“British people tend to be very loyal,” he said. “Brexit will help with that. It will be positive for British products and British brands.”

If Scotland were to vote for independence, that could be more of a risk, however.”

His comments come as First Minister Nicola Sturgeon confirmed plans for a second referendum on Scottish independence are being put on hold — but left the door open for another ballot before 2021.

Scottish Labour’s economy spokesperson Jackie Baillie added to the criticism: “This comment from Highland Spring’s chief executive speaks for itself,” said “Businesses across Scotland are tired of the SNP government’s obsession with independence and the damage the uncertainty of another referendum is doing to our economy.

“Just last week a report from the FAI warned that Scotland faces slipping back into recession.

“We need a government focused on investing in our economy and creating jobs in Scotland, not constitutional game playing.”