Growth in Scottish economy should be a ‘wake up call’ to Osborne

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by a Newsnet reporter

The continual downward revision of UK economic growth figures has called into question the UK government’s strategy of deficit reduction and has provoked fears that the Conservative led policy is strangling growth in the UK economy as the world stands on the brink of a second global recession.

by a Newsnet reporter

The continual downward revision of UK economic growth figures has called into question the UK government’s strategy of deficit reduction and has provoked fears that the Conservative led policy is strangling growth in the UK economy as the world stands on the brink of a second global recession.

Figures released yesterday, the same day as the Prime Minister’s speech, revealed that the UK economy grew by less than previously thought, 0.1% instead of the previously estimated 0.2%.  Figures for the service sector were even worse, being revised down from 0.5% to 0.2%.

The dire economic news reportedly prompted Prime Minister David Cameron to make last minute changes to his keynote speech at the Conservative party conference in Manchester. 

However the UK Treasury claimed that the figures provided evidence that the UK economy was still growing and was avoiding recession, and insisted that they supported the government’s intention of sticking rigidly to its programme of austerity cuts to reduce the deficit.  Critics have responded by pointing out that this is the worst economic outlook since the IMF had to bail out the UK in the seventies.

Scotland bucking trend

In spite of these UK policies and the global downturn, Scottish economic growth figures remain substantially healthier than the UK figures.

The overall volume of Scottish exports rose by 2% over the course of the year.  Almost all Scottish manufacturing sectors saw economic growth, with food and drink products, including the important whisky industry, up 2.4% on the previous year.  

Finance Secretary John Swinney welcomed the Scottish figures saying: “On an annual basis, manufacturing export volumes have now increased for the last four consecutive quarters and there is evidence of a stable upwards trend.”  

Mr Swinney added:  “Scottish businesses, large and small, are the primary driver of sustainable economic growth and our ability to succeed as a nation depends on the competitiveness and success of our businesses.”

The Scottish figures were also welcomed by Liz Cameron of the Scottish Chambers of Commerce who said that it was encouraging that the strong growth in Scotland’s exports seen in the first quarter of 2011 was continuing into the second quarter.

The SNP government in Holyrood claims that the healthier Scottish statistics and greater confidence in the Scottish economy are due to measures taken by the Scottish Parliament to promote growth.  Mr Swinney commented: “Over the last four years, this government has acted to support growth and tackled the challenges presented by the global economic downturn.

“We have set an ambitious target to deliver a 50% increase in exports by 2017 and our economic strategy outlines practical measures, ensuring that Scottish businesses can seize on opportunities in new growth markets.”

The UK’s sluggish growth stands in stark contrast to the relatively healthy figures for the Scottish economy.  Responding to reports that the UK economy grew by only 0.1% in quarter two of this year, 0.1% less than estimated, the SNP has again demanded that the UK Government change its approach and adopt measures similar to those introduced by the Scottish government.

The SNP’s Westminster Treasury spokesperson Stewart Hosie MP said:

“These figures must act as a wake-up call to the Chancellor, who must now realise that his approach to the UK economy has resulted in choking the recovery and plunging the UK into economic stagnation.

“His stubbornness to refuse to learn from the actions of the Scottish Government is placing the UK in severe risk of a double dip recession.”

“In Scotland we’ve seen investment in infrastructure grow despite a record cut of 36.7% to our capital budget delivered by the treasury, measures to boost economic security and consumer spending, and the best support for small businesses anywhere in the UK to keep people in work.”

“The SNP’s approach to the recovery has seen employment rise and unemployment fall – the only area of the UK to see this trend.”

“George Osborne’s refusal to back business, act on capital investment and boost the economy is putting Scotland’s recovery under threat.  This refusal only underlines the case for the Scottish Parliament gaining the job creating powers that the people of Scotland voted for.”