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Fine words fail to address reality

Positive economic forecasts are notoriously fallible, but that did not prevent the Chancellor of the Exchequer, George Osborne, from peppering his Autumn Statement with them.

The economy will grow more than expected, he said; the deficit will be a surplus by 2018; employment will go up and borrowing will go down. It was, said Mr Osborne, evidence that the Coalition Government's economy strategy was working.

The forecasts certainly come from a reliable, independent source - the Office for Budget Responsibility - but as Ed Balls, the Shadow Chancellor, pointed out, it would be wise to approach such predictions cautiously, not least because the eurozone is still far from stable. Mr Osborne has also already accepted that one of his most famous forecasts - that he would balance the books by 2015 - is now unachievable.

Yesterday's statement does, however, provide more evidence that the economy is well into recovery, although it was notable how careful Mr Osborne was not to sound effusive. His phrase of the day was "difficult decisions" and he emphasised how many of them he had made.

One of them was the increase in the state pension age - an increase that will mean many men and women in their 20s now will have to work until they are 69. The Coalition says this is necessary as pensions have to stay affordable and will not be if the retirement age remains at 65. It was the Labour Government that first recognised it; the Coalition Government is merely accelerating the process.

However, not only will the rise in the pension age be a hard blow for men and women who work in demanding, physical jobs, it will also have some worrying consequences in parts of Scotland where the life expectancy is not as high as in the south of England. The Chancellor says a citizen should expect to spend one-third of their life in retirement and one-third in work but in parts of Scotland, under the new pension measures, many people will be able to enjoy only a few precious years of retirement, and maybe not even that.

As for the cost of living crisis, there was very little to comfort men and women who are continuing to struggle with rising bills, in particular energy bills. Mr Osborne knew he had to do something, but his tinkering with green levies is not enough. As the charity Energy Action Scotland pointed out, the £50 average cut to bills that the measure will bring about has already been overtaken by the price rises introduced this winter.

Longer-term, the trick Mr Osborne is seeking to pull off is sustainable recovery, but whether he can, in his words, keep Britain moving is questionable. One positive measure was the increased investment in infrastructure, including £10 million for projects in Shetland; another was the £10m for a new science centre in Edinburgh. The trick of any lasting recovery is to have many sources of growth and more investment in science and innovation will not only go some way to addressing the skills gap in Scotland; it could also provide one of those valuable sources.

In the meantime, the danger for the Government is that it continues to be overly reliant on consumer spending as the main basis of the recovery - and we know that down that road lies the danger of overheating. Mr Osborne has not solved that problem, just as he has not properly dealt with the rising cost of living. Millions of Scots are still struggling with that every day.

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