CEBR’s dire Scottish employment forecasts challenged by Swinney


By a Newsnet reporter
Scotland’s Finance Minister John Swinney has called into question conclusions in a report that forecasts Scottish unemployment will be the worst in the UK by 2016.
According to a study by the Centre for Economics and Business Research (CEBR), unemployment north of the border will surpass that of the rest of the UK in 2012 and will reach its highest level since 1993, within four years.

The study predicts that higher rates of unemployment will be seen throughout the UK as a whole, with Scotland experiencing some of the largest rises in those out of work.

However Scottish Finance Minister John Swinney challenged the claim that Scotland would suffer more and pointed out that the unemployment rate in Scotland is currently lower than the UK.

He said: “The fact is that the Scottish economy outperformed the UK as a whole in terms of GDP growth over the last two quarters of 2011 combined – and we have a higher employment rate, lower unemployment and lower economic inactivity in Scotland compared to the position south of the border.”

One of the reports authors’, economist Rob Harbron, claimed that Scotland’s ‘dependency’ on public sector employment left it vulnerable to government cutbacks.

He said: “With almost one in four workers employed by the public sector, jobs in Scotland are at particular risk to government cutbacks.

“Weak economic conditions look set to continue across the UK over the next five years and as a result, Scottish economic growth is expected to be only slow in the years to 2016, with the economy expanding by just 1.6 per cent a year by 2016, well below pre-financial crisis trends.

“Sluggish job creation in the private sector, combined with public sector job losses, look set to force the unemployment rate up from 8.8 per cent in 2012 to 9.7 per cent by the end of 2016.

“The last time that the rate surpassed this was in 1993.”

By comparison, according to the report, the UK average would fair slightly better, levelling out at 9.2 per cent from 2014 to 2016.

The 9.7% unemployment prediction for Scotland is 1.1% worse than the CEBR was forecasting for Scotland in October last year.

Mr Swinney questioned the author’s pessimistic outlook and claimed that Scotland’s economy was holding up despite the economic policies being pursued by the UK coalition, which had brought the UK into a second recession. 

Mr Swinney added:

“The most recent real figures show that Scotland’s unemployment level fell by 12,000 over the three-month period December-February 2012 – the biggest fall in unemployment in Scotland for over a year.”

Mr Swinney claimed that the report was evidence that the economic policies of the UK government were causing harm and called for more economic powers to be transferred from London to Edinburgh.

Mr Swinney continued:

“Scotland needs the full economic and financial powers of independence so that we can do even more to boost the economy and jobs.

“If this paper tells us anything it underlines the importance of achieving a ‘yes’ vote in the autumn 2014 independence referendum, so that we have all the job-creating powers at the disposal of the Scottish Parliament and government, instead of being on the receiving end of Westminster economic mismanagement.”

An unnamed Labour spokesman blamed the Tory government’s economic policies for “cutting too hard, too fast.”

The study is an amended version of the CEBR’s October report, which claimed that the Scottish economy was being held back partly by businesses being deterred by the threat of independence.

“Scotland is being held back not only by government cuts and by businesses deterred by the threat of independence,” it said, adding then that it expected Scottish unemployment to rise to 8.6% by 2016.

However in the six intervening months Scotland has attracted significant inward investment and now ranks as one of the most successful areas in the UK, with only the south east performing better.