GIVE a pound to a rich man and probably he will stash it away or put it towards buying an imported luxury.

Give the same pound to a poor man and he will spend it in his local shop. The shopkeeper will spend the same pound in, say, the local florist, who will take it along to the local barbers. The theory is that the poor man’s pound does far more to benefit his local economy.

Presumably, that is the thinking behind an eye-catching suggestion yesterday from Brian Ashcroft, professor of economics at Strathclyde University and editor of the influential Fraser of Allander Economic Commentary, which has been taking the pulse of the Scottish economy for more than 35 years.

If the government wants to stimulate growth, instead of cutting welfare benefits, it should raise them, suggests Prof Ashcoft. The idea is so contrary to the current prevailing political philosophy that it warrants a second look.

This year’s growth has been so close to zero that to the man and woman in the street, the downturn is a reality already. The Fraser of Allander Institute’s latest quarterly commentary adds to fears that Scotland is heading for another recession.

Its annual growth forecast this year is downgraded to a miserable 0.4%, rising to only 0.9% in 2012. Up to now the Scottish Government has tried to make political capital from the notion that the Scottish figures are fractionally better than the UK ones but these figures show both are worryingly weak.

The Scottish business and financial services sector, which accounts for 25% of the economy, has shrunk by more than 11% since 2007. Even Scottish jobs growth, an apparent bright spot, does not bear close examination as so many are low-paid part-time posts, while quality full-time jobs are disappearing.

The big contrast is with the US, which only recently has introduced austerity measures and where gross domestic product is now higher than before the recession. (In Scotland it is still 4% below.) This is yet more evidence that the Coalition Government has cut too much too quickly.

This has created a perfect storm in the west of Scotland where deep cuts in public spending and public-sector employment coincide with comparatively low levels of private sector job creation. In addition around £1bn will have been sucked out of the local economy by 2015 in welfare cuts.

The institute once calculated that every £10.8m in benefits creates 180 jobs, so it is not hard to calculate the devastating effect of major cuts in benefits and tax credits on greater Glasgow. The crisis in the eurozone merely exacerbates the situation, by reducing the scope for an export-led recovery.

The Government talks a lot about stimulating the supply side of the economy but it is becoming clear that increased demand is the more urgent requirement. In that context, it would make sense to increase benefits rather than pouring billions into the black hole known as quantitative easing. maintian incetives to work the same argument could be applied to raising the national minimum wage to the level of the living wage (£7 an hour), or reducing National Insurance.

Of course, the SNP Government will argue that if these levers were in its control, all would be well, and meanwhile their policies are making a difference. Brave words but come the next election, voters will judge it on whether Scotland has weathered the chilly economic climate better or worse than the UK as a whole. So far the evidence is unconvincing.