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Economy on the up but who can take the credit?

Sometimes it is said that newspapers never report good news.

This is not the case and today the good news is that Scotland's economic recovery is expected to strengthen in 2014, perhaps even returning to pre-recession levels of output, though productivity will need to improve before it feeds through to higher wage levels and rising employment.

The figures do have to be qualified. There is still a cost of living crisis and the falling joblessness total masks the rising numbers in part-time jobs who wish to work full time. According to the New Policy Institute, more than six million households in the UK as a whole are working households in poverty.

Nevertheless, these are cheering signs that Scotland and the UK are on the way to putting the worst recession in 80 years behind them. If the recovery continues, the prospects for further employment growth and wage level rises should improve.

So who is responsible? The Finance Secretary John Swinney has trumpeted the new figures, avoiding in his comments any acknowledgement of the UK Government's role in boosting growth (even though the UK's growth rate was revised upwards for 2013 and 2014 by the Office of Budget Responsibility earlier this month and even though the Scottish Government's own chief economist in his report today says that this will benefit the Scottish domestic recovery). At the same time, Mr Swinney says that the Scottish Government needs more powers. So which is it? The SNP cannot credibly claim credit for the economic good news at the same time as arguing that is does not have control of the economy.

That was puzzling Willie Rennie, the leader of the Scottish Liberal Democrats, at Holyrood last week, when he pointed out to the First Minister that taxes on jobs were down, fuel duty had been frozen and growth was up, due to Westminster policies. "The First Minister does not support all those measures but will he, for once, recognise the achievement?" he asked. Funnily enough, Mr Salmond did not feel inclined to do so. He would have more credibility with sceptical voters if he did.

The question is how to ensure that the nascent recovery turns into sustainable prosperity. The Business Secretary Vince Cable warned once again a few days ago of a "raging housing boom" in the south east of England. This clearly risks another bubble. Analysis of UK growth figures suggests that greater consumption, largely fuelled by debt rather than growing wages, is behind this early phase of recovery; indeed today's report highlights a trend for growing household spending, alongside a small boost from exports. Raising interest rates could help cool the fever, but could also be damaging to business and force householders to spend more of their income on mortgage repayments. How likely is a rate rise? That depends on the Bank of England, though polling suggests more voters would directly benefit from a rise than a continued freeze.

There will unfortunately be more trouble ahead, but at least the recovery has begun in earnest, across the UK.

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Local government

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