HIGH FUEL prices are “casting a cloud” over the prospects for Scottish businesses, a survey revealed yesterday.

About 350 companies took part in the quarterly poll by Scottish Chambers of Commerce and the Fraser of Allander Institute at Strathclyde University.

Many complained of sales and future orders slackening while pressure on profit margins remained unabated. Transport costs were contributing to this.

SCC director Liz Cameron said, “Our earlier warnings about the climate for Scottish businesses becoming more unsettled is underlined by these latest figures. We’re now witnessing decidedly mixed results across key sectors of our economy, with levels of business optimism, turnover and profitability remaining modest at best or, in several cases, declining.

“But the one constant of real concern is increasing transport costs, which are now at their highest level for five years.

“The distances involved when it comes to transporting goods means that fuel is a much more significant cost factor for Scottish firms than those south of the border.

“Transport costs in general, and high fuel prices in particular, are now casting a cloud over most sectors of the Scots economy. This is increasing pressure on firms to raise prices which is affecting expectations about profitability.”

Mrs Cameron warned that investment plans were being hampered by these conditions and the country’s economic development was being restricted by a lack of research and development.

The Scottish Executive’s proposal to offer a business rates discount for firms investing in R&D needed to be introduced as quickly as possible, she said.

The survey found that confidence in the manufacturing and tourism sectors was up, but the wholesale and retail distribution sectors were showing falls.

Pay increases in the third quarter of this year were slightly higher than during the previous three months, with workers in construction averaging pay rises of 6.25%.