SCOTTISH business growth has stalled during the first three months of 2018.

The country has experienced the weakest volume of business in two years and export growth continues to slide with capital spend reducing across the country, according to figures from the Royal Bank of Scotland’s Scottish Business Monitor.

The report, conducted by the Fraser of Allander Institute, found that most regions across Scotland have seen no increase in growth during the first quarter of the year, with the exception of the east central areas, which were boosted by the financial services sector.

The survey of more than 400 Scottish businesses reveal that a third (32 per cent) of firms said turnover rose in the three months to March. Thirty two per cent said turnover fell.

Despite such negativity, 16 per cent of firms expect sales to grow in the six months to September, with a stronger rebound in services (+20 per cent) than in production (+8 per cent).

Commenting on the figures, Sebastian Burnside, chief economist with Royal Bank of Scotland, said: “Scottish businesses are eagerly anticipating an end to the squeeze on household finances.

“Inflation was still eating away at people’s pay packets in the first quarter of this year, leading to businesses reporting stable revenues. But looking forward there’s confidence that demand will pick up as price pressures start to ease.”

Professor Graeme Roy, director of the Fraser of Allander Institute, added: “Following a challenging 2017, this first Scottish Business Monitor of the year shows that the Scottish economy continues to face challenging trading conditions.

“Firms in the survey reported a slowdown in some key trends but businesses expect many of these trends to pick up during the remainder of 2018. For example, the survey finds that export activity unexpectedly fell, however on balance firms expect export activity to grow over the coming 6 months.

Prof Roy added: “Meanwhile planned investment activity – something which is key to long term economic growth – remains stubbornly low and firms don’t expect this to improve in the immediate period ahead.”