Capital Investment imperative as report predicts gloomy outlook for Scotland as UK struggles


  By Martin Kelly
The Scottish government has upped calls for investment in infrastructure projects after a report by the Scottish ITEM Club painted a gloomy picture for Scotland’s economy within the UK over the next four years.
Commenting on the details of the report by Ernst & Young, the SNP has claimed it demonstrates why it is imperative that George Osborne uses his autumn statement this week to invest in capital projects.

The report predicts the Scottish economy will struggle until 2016, with growth falling short of the UK average.  It identifies the problems facing the construction sector, stating that “whatever the merits of placing such an emphasis of the initial phase of public sector spending restraint on capital budgets, the effects on the construction sector are clear to see.”

The Scottish Government has repeatedly called on UK Chancellor George Osborne to counter the problems in the sector by releasing funding for investment in shovel-ready projects, which they say will provide a swift boost to the construction industry.

The report – which puts Scotland’s economic performance as close to similar sized countries Denmark and Finland – also identifies the effects of the austerity programme currently being pursued by the Westminster Government as one of the main domestic risks facing the level of economic performance in Scotland.

According to the report, growth in Scotland’s business and financial services sectors outperformed the rest of the UK; it identifies this sector as crucial to longer term growth and employment prospects.

Commenting, SNP MSP John Mason who sits on Holyrood’s Finance Committee said:

“What this report makes clear is precisely why it is so important that George Osborne does not let another opportunity to boost growth slip by him in his autumn statement this week.

“The savage cuts to capital investment that he has forced on the country have had a clear and indisputable impact on Scotland’s economy.

“It is long past time that the Chancellor ceased his stubborn refusal to act and invested in the kind of shovel-ready projects that can quickly get our economy moving again.

“The construction sector is absolutely critical to our economic wellbeing and has been utterly failed by this Westminster Chancellor.

“His failings clearly demonstrate why the decisions over Scotland’s economy should be made by people in Scotland who by definition are the best placed to make these decisions.

“Only a Yes vote in 2014 will secure that right for people in Scotland and ensure that we no longer have to pay the price of a Westminster Chancellor’s inability to fix his mistakes.”

The Ernst & Young paper follows reports that a promised boost to the Scottish economy of a re-deployment of thousands of troops, is under threat.

This weekend it emerged that the creation of a ‘super garrison’ near Edinburgh looks set to be scrapped by the MoD, with the troops to be based in England instead.

Confirmation will be a blow to the local economy which would have benefited from the new barracks complex which was to be built at Kirknewton in order to house troops returning from Germany.


The Ernst & Young ITEM Club report can be viewed at:$FILE/EY_ITEM_Club_Scotland_2013.pdf