ANY hope of brighter economic prospects for Scotland offered by a marginal drop in the unemployment rate from 8.1% to 8% and a rise in the number in work was immediately dampened by confirmation that the Scottish economy, like that of the UK, is officially in a double-dip recession.

Alex Salmond's claim that the Scottish economy was exhibiting greater resilience than the UK is true over the last three months of 2011 and the first quarter of this year when GDP in Scotland fell by 0.2% against 0.7% for the UK. However, a year-on-year comparison shows growth of 0.2% in Scotland compared with 0.6% for the UK, indicating a lagging pattern of recovery north of the Border and the fragile nature of the few green shoots in sight. That was confirmed earlier this week when the IMF again cut its growth forecast for the UK to just 0.2% for 2012 largely in anticipation of further slowdown from the eurozone crisis.

While it is good news that the youth employment rate has risen slightly, it is too early to judge whether the economy will pick up sufficiently to prevent a generation failing to realise their full potential. Programmes to encourage employers to take on young people are under way both in Scotland and the UK and this is one area where all cross-border skirmishing should be put aside, so that the Scottish Government can ensure young people and employers take full advantage of the opportunities offered by the Coalition Government's £1bn Youth Contract.

The latest downturn in Scottish GDP was due to a fall of 6.9% in construction output, which has now returned to the levels of 2009 when deepest impact of the recession was felt. The need to stimulate investment in the private sector brought another move by the Chancellor to kickstart the stalled economy. The Government will underwrite £40bn of funding for infrastructure projects that have failed to raise money from private investors. Strict conditions, including being ready to start construction within 12 months and an ability to make an impact on growth, will have to be met. Loans will also be available to some public private partnership projects but will have to come from money already allocated to Government departments. Because in theory no extra public money should be spent, George Osborne can avoid being accused of making a U-turn or adopting plan B. Since the new scheme follows within days of the announcement of the £80 billion funding for lending arrangement to encourage banks to increase loans and reduce interest rates to businesses and house buyers, it appears the Treasury has finally accepted that reducing the deficit requires growth to create jobs. While all this should help to bring forward projects, it could take a year before the diggers move in and it is possible that the projects backed by Government guarantee would go ahead anyway.

By contrast the First Minister's call for direct investment in public sector projects would have the merit of getting some of his shovel-ready projects on site quickly. Mr Osborne would achieve more growth by recognising that investment in infrastructure has the double benefit of getting the economy and the country moving.