State of the economy
The Scottish Government’s Chief Economist today published the quarterly State of the Economy report, which provides further evidence that supports my calls to the Chancellor to use the Budget to invest more in capital projects, take action to boost lending to business and build consumer confidence.
The report confirms: Scotland’s recession has been shorter and shallower than that of the UK as a whole; Employment in Scotland is higher than across the UK; and that the main factors restricting growth are low levels of investment, a shortage of lending to small business and reduced levels of consumer spending alongside continued global uncertainty.
The report shows sectors of our economy such as food and drink, hotels and catering, and business services showing positive growth this year against a difficult economic backdrop. And as a small open economy, the Chief Economist says that the strength of the recovery in the months ahead will depend on events in Scotland’s key export markets – US and EU – and the ability to increase our share of global investment and trade, and develop new markets.
Based on the Chief Economist’s projections it could now be 2027-28 before Scottish spending returns to its 2009-10 level in real terms, two years later than forecast at the time of the Draft Scottish Budget. The forecast cumulative real terms loss to the Scottish Budget over this period could be 51 billion pounds, a third higher than the 39 billion pounds forecast last autumn.
Today I was in London for a meeting of UK and devolved government, where I set out the need for the UK Government to change course. We need the UK Government to follow the Scottish Government’s ‘Plan MacB’ approach and increase capital investment, enhance economic security, and ensure that businesses have access to finance to create the conditions necessary for recovery.