Return to growth 'by 2014'

Chief Scottish Political Correspondent

Friday 27 July 2012

THE Scots economy could return to pre-recession values in 2014, a year ahead of the UK, according to the Scottish Government's chief economist.

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ROBBIE DINWOODIE CHIEF SCOTTISH POLITICAL CORRESPONDENT

The recovery remains fragile, according to Dr Gary Gillespie, but he argues that provided there is no meltdown in the eurozone there is reason to believe that the Scottish economy will stabilise in 2013 and return to real growth in 2014.

That would be the year when the overall value of the Scottish economy would return to pre-recession levels and would be a year ahead of the prediction by the Office of National Statistics of the point when the UK economy is expected to return to that level.Mr Gillespie's report said: "There are signs for optimism. If there is a clear resolution to the euro crisis, coupled with both a pick-up in confidence in advanced economies and the potential for rapid growth in a number of key emerging economies, this could lead to a strong upturn."Factors such as higher savings and pension contributions north of the Border, strong export performance, and inward investment success are seen as factors in improving prospects for recovery. The report highlighted the value of projects from the accelerated capital spending project of almost two years ago and the downturn in the construction industry since then.However, Professor Brian Ashcroft of the Fraser of Allander Institute said: "I would be very cautious about this. I expect we will be talking 2015 ourselves."Finance Secretary John Swinney said: "The economy in Scotland is demonstrating a greater resilience than the UK, but global growth is forecast to remain subdued for the rest of this year, with improvements occurring through 2013."Mr Swinney said UK GDP figures showed the UK double-dip deepening and construction needing help. He said: "Last month we announced our plans for a £105 million package of economic stimulus, which will maximise opportunities to create jobs and growth."We need the Chancellor to take action, follow Scotland's lead, and borrow an extra £5 billion to invest in capital projects which would guarantee Scotland's £400m plus share would be allocated in this financial year."This Government recognises that with the full economic and financial powers of independence we could maximise Scotland's economic success and prosperity. In the meantime we need the UK Government to adopt a Plan B and perform another budget U-turn."However, Labour blamed the SNP Government for the construction industry recession. Shadow Finance Secretary Ken Macintosh said: "This report shows how little impact the SNP's much publicised economic interventions have had. "While much of the blame can rightly lie at the door of 11 Downing Street, that's no excuse for the SNP's failure to address the real issues in Scotland's economy."The report also highlights Scottish Labour's concern about the record levels of youth unemployment, which should be a wake-up call for the Scottish Government to do more."The real problems affecting the construction industry are at the heart of these latest figures and the SNP's £100m cut to housing cannot have helped. "Housing usually makes up around 40% of the Scottish construction industry, but we've seen 12,000 job losses in that sector in the last year alone. This was a blunder by the SNP that has hit our economy hard."

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Return to growth 'by 2014'

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