By Bob Duncan
Deputy Scottish First Minister, Nicola Sturgeon, will use her keynote speech in Perth to call on UK Chancellor George Osborne to increase capital spending to promote growth in the British and Scottish economies.
During the recent Conservative party conference in Birmingham, both Osborne and Prime Minister David Cameron refused to bow to increasing pressure and consider a ‘plan B’, which would add spending on construction and infrastructure to the government’s current austerity programme.
For many months, the Scottish government has been calling on the Westminster coalition to increase its own capital spending, and to fund £300 million of ‘shovel ready’ projects in Scotland, in a move designed to speed up recovery of the economy.
Critics insist the injection of capital is needed in order to give a boost to the construction industry, which has been damaged disproportionately by deep cuts in capital budgets imposed by London.
Just last week, Westminster’s economic credibility was further damaged when the IMF’s Christine Lagarde warned against countries rushing to cut spending, stating “it’s sometimes better to have a bit more time”.
Ms Lagarde gave her strongest warning yet that countries relying on austerity alone risked worsening the recession, and pressed the UK among others to consider capital spending as a driver of economic growth.
Then on Wednesday, Scottish construction industry leaders warned that Scotland’s construction sector requires “urgent action” to stimulate growth and protect thousands of jobs after it had suffered a collapse in confidence.
The demand for government action came after a major survey highlighted a sharp decline in conditions during the third quarter of 2012. More than a third of businesses reported a downturn, with the outcome for Scotland even bleaker than for rest of the UK.
It is estimated that the construction industry supports some 31,000 businesses north of the Border employing 170,000 people and that it is worth about £21bn annually to the Scottish economy. But many firms have been forced to lay off staff during the recession while others have gone to the wall as work dried up.
During her keynote address to SNP Conference in Perth today, Scotland’s Deputy First Minister Nicola Sturgeon will say:
“We are doing everything we can but our economy needs more.
“So I have a very direct message for the Chancellor today. A message on behalf of every construction firm clinging on by their fingertips. On behalf of every unemployed person desperate for some light at the end of the tunnel.
“Our economy needs a capital stimulus and it needs it now.
“If the Chancellor cares about getting growth back in our economy, if he cares about getting people into work and giving our young people hope of a brighter future, then listen – not to us – but to the growing band of economists and business organisations who say it is time to take a different course.
“Use the Autumn Budget Statement to increase capital spending and accept, once and for all, that we will not cut our way out of this recession.
“We must build our way out of recession.”