Over the next few weeks, visitors to the estate agent Clyde Property will notice a subtle but significant change.

Signs at its branches in the west of Scotland will read “letting and estate agents” to reflect its new approach to surviving the downturn.

Rentals account for 50% of its business and have doubled since the start of this year but, far from threatening the core business, the change will enhance it, says Bill Cullens, the co-founder.

“Rentals provide a stream of income and allow people to ride out the worst of the downturn while still being able to move,” he said. “Earlier this year we had about £1.5m tied up in property for sale that was not moving and it was clear that the slowdown was going to continue. Letting already accounted for about 25% of our business but it was run by a separate department. Now it’s an integral part and all staff are trained to deal with rentals as well as sales.”

Cullens shifted the focus of the business after a potential buyer walked away as the credit crunch began to bite.

His actions to see the firm through the downturn include selling its new headquarters for £1.4m and spreading its functions across the branches.

He also did a deal with some surveyors to offer customers home reports for £250 before their introduction next month, when they are expected to cost more than £1,000. “It was a short-term measure which got people through the door and helped do business,” he said.

But will other companies and areas of the economy be so lucky? A forecast by Ernst & Young’s Scottish Item club paints a grim picture.

In the year to come, growth, just 0.9% for 2008, will vanish and the economy will contract by 0.4%. Unemployment will rise significantly and Scotland will face its worst recession since 1980.

Back then, hordes of jobs were lost as the manufacturing sector was devastated. This time the axe will fall in areas like financial services, which directly and indirectly account for 180,000 jobs in Scotland. If more jobs are lost than the 14,000 that Item predicts, the economy will contract by as much as 1% and unemployment could hit 200,000.

The sector accounts for 3.6% of all financial services employment in the UK, making it one of the most exposed regions outside London. An analysis of other services which could lose out in a shake-out in finance throws up some worrying results. Postal and courier services face losses of £557m, and telecoms £513m. Almost as much again could be lost in computing services, while areas such as market research, advertising and construction would be hit.

“Banks have been big buyers of these services. They will not be replaced in the short term, with potentially serious consequences,” said Dougie Adams, the author of Item’s forecast Retailing, manufacturing and construction will find little short-term cheer in the report. “The housing sector’s stressed state will have clear implications for the construction industry and household goods retailers,” said Adams. “There is also the issue of how falls in housing wealth, combined with the sharp setback in equity markets, will influence consumers’ behaviour. A further crisis in confidence, and the unprecedented nature of the current turmoil, could bring a sharper and more pronounced increase in savings by households, knocking activity across the economy.”

Amid the gloom, there is a chink of light. Scotland’s housing market is not expected to plumb the same depths as the rest of the UK and it could help Scotland bounce back in 2010. A 15%-25% drop in house prices seems bad, but it will nowhere be as bad as areas like the southeast of England. Cullens said: “When confidence returns to banks and they start lending, then the market will revive. People die, people move jobs, people have children, so the demand for housing is not going to go away.”

Ken Ross, the chairman of the Scottish Property Federation, said efforts to stimulate the economy should focus on housing rather than large infrastructure projects. “It can take three or four years for these things to get through planning, whereas committing to more affordable housing, for example, could feed into real projects in the next year.”

Hywel Ball, the managing partner of Ernst & Young’s Scottish practice, also says Scottish businesses are well-prepared. “Businesses are generally entering this downturn in a better state, in terms of their financial positions, than has typically been the case,” he said.

Item predicts growth for Scotland at 1.5% in 2010, compared with 1% for the UK, but expects it to lag behind the UK in 2011 at 2.5%, against 2.9%.

“With banking being a more constrained and slower growing industry, the assumption that growth in business services will return to past trends must be called into question,” said Adams. “Scotland desperately needs new areas of success that are outward-looking and competitive.”

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