Business leaders have been expressing concern about the latest Scottish economic growth figures. According to the Scottish government, the economy grew by just by 0.1 per cent during the spring, the same as the rest of the UK. Any lower and the country would officially be back into recession.
The strongest growth was seen the production sector, mainly driven by utilities such as electricity, gas and water. The services sector also grew by 0.1 per cent, with distribution, hotels and catering performing reasonably well.
However, output in construction fell by 2.3 per cent. The last figure prompted the chief executive of the Scottish Building Federation to call for more government action.
Michael Levack warned that “this significant contraction in the construction industry of 2.3 per cent in the second quarter of the year is deeply concerning and must act as a wake-up call. It translates as around 10,000 jobs being lost in just three months. The construction industry is a key driver of Scotland’s economy, but we are continuing to suffer a prolonged slump.
“We need to see an even stronger emphasis from the Scottish government on protecting and consolidating capital investment in construction projects to support the industry and start rebuilding employment, skills and capacity.”
His concern was shared by Iain McMillan, Scottish director of the CBI Scotland. “Scotland's economic recovery is tepid,” he said, “and lacks any discernible vigour and momentum, with expansion in some sectors being offset by weaker performance in others. That is why we continue to argue that the Scottish government's spending plans should be improved in order to better galvanise growth.”
Mr McMillan called for a far bolder approach to making savings, to release money for further investment in infrastructure and support for exporters. He also called for two business tax rises – on retailers and on empty commercial premises – to be scrapped.
The Federation of Small Businesses (FSB) warned that many of the smallest firms are being put under real pressure by rising energy and fuel costs. It said that the big energy companies, like the banks, were making it difficult for the small business community to drive the recovery.
The FSB Scottish policy convenor, Andy Willox OBE, said that Scottish businesses and consumers lacked the confidence to spend and invest – resulting in today’s stagnant gross domestic product figures. “We need to see continued and co-ordinated action by government at all levels," he said, "to boost small businesses and help them create the new private sector jobs the economy urgently needs.”
The Scottish finance secretary, John Swinney, pointed out that Scotland's economy had continued to grow in the second quarter of 2011 and that the Scottish labour market continues to outperform the UK as a whole. But he added that “these figures reinforce the urgent need for the UK government to deliver a Plan MacB approach, to ensure that the recovery we are building here in Scotland is not derailed by Westminster's wrong-headed economic policy.”
Mr Swinney added that "the Scottish government is using all of the economic powers at our disposal to secure new jobs and investment, and strengthen recovery. This must deliver real action in the areas where Scottish government policy is making a difference: increased capital expenditure, improved access to finance for medium and small-sized businesses, and the introduction of measures to boost consumer confidence and economic security."
But Scottish Labour described the figures as “deeply worrying”. According to their finance spokesman, Richard Baker, “these figures show Scotland teetering on brink of recession and that the economy is actually going backwards. The SNP's economic plan simply isn't working. Far from the SNP's Plan MacB working, it is actually making things even worse with persistent stagnation, rising unemployment and fears for key sectors.”
Donate to us: support independent, intelligent, in-depth Scottish journalism from just 3p a day
Related posts: