VETERAN economist Brian Ashcroft responded with a wry chuckle and a joke when asked if he expected Chancellor George Osborne to heed a call not to adopt further austerity measures in this month’s Budget.

“I am sure he will entirely cancel his plans,” quipped Mr Ashcroft, who was presenting the highly-regarded Fraser of Allander Institute’s latest economic commentary.

Although he could not resist a brief laugh when contemplating the notion of Mr Osborne re-thinking any plans for further austerity because of warnings from Strathclyde University’s Fraser of Allander Institute, Mr Ashcroft is well aware of the seriousness of the economic situation.

Mr Ashcroft, economics editor of the Fraser of Allander commentary, has warned plenty of times in recent years about the likelihood that the extent and mix of Mr Osborne’s austerity programme would prove a drag on growth in Scotland and the UK as a whole.

And, looking at the frequently disappointing growth figures since Mr Osborne took up his post in 2010, it certainly seems that Mr Ashcroft’s warnings, while not heeded by the Chancellor, were prescient.

Mr Ashcroft’s quip indicates he knows fine well that Mr Osborne is highly unlikely to eschew further austerity just because the Conservatives’ grand economic plan does not appear to be working.

Nevertheless, Mr Ashcroft seemed exasperated about the Chancellor’s determination to pursue a budget surplus by 2020, noting that such an aim was setting the UK apart from other advanced Organisation for Economic Cooperation and Development member countries.

Mr Ashcroft, flagging the importance of the likes of public sector investment projects in difficult economic times, said of Mr Osborne and his austerity drive: “The more you take out of the economy, the lower the tax receipts are, so you are chasing your tail.”

If Mr Osborne feels inclined to reflect on the state of the UK economy as he prepares his March 16 Budget, there is plenty of gloomy reading for him.

Gross domestic product (GDP) figures last week highlighted the perilously unbalanced nature of the UK economic recovery, such as it is. They showed household spending drove UK growth in the fourth quarter of last year as business investment tumbled.

And they confirmed expansion remained stuck well below the UK’s long-term average rate, with GDP growth in the fourth quarter confirmed at 0.5 per cent by the Office for National Statistics.

Surveys published this week by the Chartered Institute of Procurement & Supply have shown sharp slowdowns in growth of the UK’s services, manufacturing and construction sectors. Services sector growth slowed in February to its weakest pace since March 2013, according to CIPS.

The UK economy has been over-reliant on the services sector for growth, with manufacturing having struggled in recent times, as Mr Osborne’s March 2011 Budget vision of “a Britain carried aloft by the march of the makers” continues to prove elusive. So the Chancellor should be concerned about weakening service sector growth.

The challenges faced by the Scottish engineering sector are highlighted again in the latest survey of activity published today. Industry body Scottish Engineering’s survey shows the sector suffered further falls in order intake, output volumes and export business in the latest quarter. Weak oil prices continued to weigh on activity.

And Bryan Buchan, chief executive of Scottish Engineering, expressed disappointment over recent announcements of plant closures in the sector in Scotland. He cited Texas Instruments’ planned closure of its semiconductor plant at Greenock, which employs nearly 400 people.

Contemplating the general challenges facing the Scottish engineering sector, Mr Buchan highlighted the impact of slower growth in China as well as weakness in some European Union export markets and Russia. He cited challenges for exporters in the Scottish engineering sector arising from the pound’s strength against the euro, albeit sterling has fallen back a bit against the single currency in recent weeks.

These are challenges faced by the UK manufacturing sector as a whole. But we should remember, when Mr Osborne stands up to deliver his Budget and perhaps focuses on international headwinds, that the domestic UK economy remains weak.

It is not surprising that it is weak, given the savage welfare cuts favoured by the Conservative administration. As well as having a major detrimental impact on society, such cuts are also the surest way to suck demand straight out of the economy. The UK economy has been hit hard by a raft of public spending cuts, and a huge reduction in the corporation tax rate appears to have delivered little, if anything, in terms of growth.

Meanwhile, we have the spectre of the referendum on the UK’s continuing membership of the EU looming over everything.

This is a frightening spectre indeed. Fraser of Allander is warning that Scotland’s future growth faces a “real threat” if the UK leaves the EU because trade and inward investment will be lost, and Mr Ashcroft has observed there is a “strong chance” of a Brexit vote.

Paul Brewer, a partner of accountancy firm and Fraser of Allander commentary supporter PwC, said: “The potential for the forthcoming Budget to exert further fiscal tightening, oil price uncertainty and the uncertainty surrounding the potential outcome of the EU referendum together create a difficult environment for business and investor confidence.”

Mr Ashcroft, who noted the weak economic backdrop and rock-bottom interest rates, said Mr Osborne’s determination to achieve a budget surplus over such a short timescale “seems to fly in the face of economic reason”.

Calls from Mr Ashcroft and other experts for no further austerity measures will likely once again be ignored by Mr Osborne as he pursues a “long-term plan” that, in contrast to his own apparent view, does not seem to be working at all for most people. It will be a great pity if Mr Osborne does not heed the common-sense warnings on austerity, but, as Mr Ashcroft acknowledges, not in the least surprising.