Scots economy ‘will be back on track by 2014’
By Keith Aitken in Edinburgh | 26 July 2012
Scotland’s economy is likely to return to pre-recession output levels in 2014, the year of the independence referendum, according to the Scottish Government’s State of the economy report.
Growth prospects for the rest of this year are ‘fragile’ but there will be some pick-up next year, the quarterly report predicts.
Finance Secretary John Swinney urged the UK chancellor to ‘follow Scotland’s lead’ and stimulate the economy through accelerated capital investment. He said George Osborne should borrow an extra £5bn for this purpose.
The report, prepared by government chief economist Dr Gary Gillespie and published today, warns that the strength and speed of recovery in Scotland will depend on a range of factors. These include eurozone developments, demand levels in major Scottish export markets such as the US, and revived confidence among both businesses and consumers.
It also admits that recovery in Scotland, as in the wider UK and other advanced economies, might be hampered by the private sector’s inability to stimulate robust growth against a background of de-leveraging – reducing debt levels. Confidence, it says, would be greatly boosted were a solution to emerge to the euro crisis.
The report describes prospects for the construction industries as ‘challenging’ unless more is done to stimulate demand. But it suggests that the underlying performance of the production and services sectors in general is better than was implied by the recent gross domestic product figures, which confirmed that Scotland was still in a double-dip recession.
‘The economy in Scotland is demonstrating a greater resilience than the UK, but global growth is forecast to remain subdued for the rest of this year, with improvements occurring through 2013,’ Swinney said.
‘The [Scottish] Government recognise that with the full economic and financial powers of independence we could maximise Scotland’s economic success and prosperity,’ he added. ‘In the meantime, we need the UK government to adopt a Plan B and perform another Budget U-turn.’
But Labour claimed that the construction difficulties had been aggravated by the Scottish Government’s £100m cut in the housing budget. Shadow Scottish secretary Margaret Curran said: ‘The Scottish National Party need to stop obsessing about separation and concentrate on delivering jobs, confidence and growth for Scotland.’