Recession fears rise for Scottish economy

Friday 30 December 2011

SCOTLAND'S faltering economic recovery has stalled while exports have "plunged", a key survey has revealed, raising fears of renewed recession as public-sector job cuts bite and unemployment mounts.

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IAN McCONNELL and ROBBIE DINWOODIE

The survey paints a picture of an economy struggling to show any signs of growth in its manufacturing and services sectors, with consumer and business confidence depressed and the prospects for next year bleak.

Last night the forecast prompted anger and dismay among opponents of First Minister Alex Salmond, with Labour's Ken Macintosh, the Shadow Finance Secretary, saying the findings were a wake-up call for the Scottish Government.

The grim assessment is contained in the latest quarterly business monitor from Lloyds TSB Scotland, conducted by Strathclyde University's Fraser of Allander Institute.The survey comes amid widespread fears that the UK could suffer a double-dip recession, with swingeing public spending cuts from the Coalition Government and the eurozone debt crisis both impacting on the economy. Donald MacRae, chief economist of Lloyds Banking Group in Scotland, saw "no definite sign of a lapse into a double-dip but every indication of an already slow recovery slowing further to the point where growth is negligible or non-existent".Mr MacRae added: "The already-muted recovery in the Scottish economy has stalled. Subdued domestic demand, coupled with the global slowdown, has hit both services and manufacturing."In the face of slowing global demand, falling business and consumer confidence in the UK, and cuts in Government spending, the Scottish economy is struggling to maintain growth and momentum. "A more vigorous recovery awaits an uplift in both consumer and business confidence."The survey reveals a greater percentage of Scottish firms suffered a fall in turnover than achieved an increase in the three months to November. Turnover fell for 33% of Scottish companies and only 30% enjoyed a rise. The monitor pointed to a sharp deterioration in conditions in the service sector.And expectations for the next six months are significantly worse, with only 20% of Scottish companies expecting a turnover rise, and 34% projecting a fall. The remainder forecast revenues would be flat. Consumer confidence has also fallen sharply since last year.Exports, the main recovery hope, "plunged" in the three months to November because of the global slowdown and the eurozone crisis.Mr Macintosh said: "If the SNP Government needed a wake-up call, this is it. This report is deeply worrying, as is the Scottish Government's reaction. "We need costed and planned measures to stimulate the economy, but instead the SNP Government veers between rose-tinted claims its 'Plan MacB' is working or even more fanciful assertions that somehow everything would be alright if only we separated from the UK."A Scottish Government spokeswoman said it would continue to do everything in its current powers to strengthen the recovery, pointing to a Westminster cut of more than one-third to the capital budget.She said the recently announced infrastructure programme was "a key driver of jobs and recovery", supporting £9 bil-lion of spending over the next three years to deliver new schools, hospitals, houses, roads, water infrastructure, and high-speed broadband across Scotland.She added: "We are also doing all we can to support small businesses through our comprehensive relief package worth over £500 mil-lion a year, the most generous anywhere in the UK."But Tory leader Ruth Davidson cited college budget cuts, the planned retail levy, scrapping town regeneration, and the lowered target on house-building, adding: "This has all happened on the First Minister's watch. He needs to stop running away and take responsibility for his actions, as he has the powers to make a difference."Scottish Liberal Democrats leader Willie Rennie said: "Rather than debating whether Scotland is ahead, behind, up or down compared with the UK, the Scottish Government should heed the warnings of an increasing number of business leaders and change course."

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Recession fears rise for Scottish economy

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