By a Newsnet reporter
The Finance Secretary John Swinney has called on the Chancellor of the Exchequer to take immediate action, through a stimulus to capital investment, to address the UK double-dip recession and prevent Westminster’s economic policy from further hampering Scotland’s economic recovery.
Mr Swinney’s comments follow yesterday’s publication of the quarterly State of the Economy report published by the Scottish Government’s Chief Economist, Dr Gary Gillespie, which provides both an update on recent developments in the Scottish economy and on outlook of future growth prospects.
According to the report, the Scottish economy is expected to return to pre-recession levels by 2014, quicker than the UK. It said conditions in the construction sector are likely to remain challenging without a stimulus to demand.
However, the report said underlying performance of other sectors – such as production and services which together make up 90 per cent of the Scottish economy – has been far healthier than the headline GDP figures suggest with further scope for expansion.
One of the areas highlighted by the Scottish government for several months has been construction. Scottish Ministers have repeatedly called for more funding to be made available for infrastructure projects in order to help the ailing construction sector.
Commenting on the report and recent figures that showed the UK economy struggling badly with construction being particularly affected, Finance Secretary John Swinney highlighted the challenges ahead.
Mr Swinney said:
“This updated analysis sets out the challenges and opportunities that Scotland faces in strengthening future economic growth and prosperity. The economy in Scotland is demonstrating a greater resilience than the UK, but global growth is forecast to remain subdued for the rest of this year, with improvements occurring through 2013.
“This week’s GDP figures showed the UK double-dip recession has deepened with a further fall in output of 0.7 per cent and a 5.2 per cent fall in UK output in the construction sector. This analysis also highlights that the conditions in the construction sector are likely to continue to remain challenging without a pick-up in demand, which reinforces my view of the need for the UK Government to take immediate action to stop the sector’s slowdown through capital investment.”
Mr Swinney highlighted the lack of powers available to the Scottish government and acknowledged the vulnerability to external events, such as a struggling Eurozone and the US economy, that existed.
Highlighting Scotland’s superior employment rate over the rest of the UK, and Scotland’s higher GDP performance over the last six months, Mr Swinney called on funding for Scotland’s 32 ‘shovel ready’ projects and added:
“The global recovery is clearly fragile, but it’s important the UK Government does more to address its failure to stimulate growth through delivering the capital investment that is needed to boost the construction sector and lay the foundations for recovery.
“We need the Chancellor to take action – follow Scotland’s lead – and borrow an extra £5 billion to invest in capital projects which would guarantee Scotland’s £400 million plus share would be allocated in this financial year.”