Analysis: Expect economic bad news in run-up to Holyrood poll

Published on Wednesday 2 March 2011 17:26

CONFIRMATION that Scotland's recovery from recession has "faltered" will come just days before the Holyrood elections in May, it has emerged.

Detailed figures on Scotland's performance in the last quarter of 2010 are likely to be published on 20 April, just two weeks before the 5 May Scottish Parliament poll.

They are widely expected to mirror the UK performance from that spell, when the economy contracted by 0.6 per cent.

Much of the fall was blamed on the cold snap in December, but even without problems caused by the weather, the economy would still have shrunk, the figures found.

The Scottish Chambers of Commerce has already warned of an increasing slowdown throughout 2011.

The Fraser of Allander report warned yesterday that Scotland's economy may be found to have fallen further than the country as a whole.

The report declared: "It seems reasonable to assume that Scottish GDP growth will be similar to the UK in the fourth quarter.

"Indeed, there is a risk that the outturn could be worse here than in the UK because it is arguable that the weather was worse here in December and there is evidence that the Scottish recovery is slowing and is weaker than the rest of the UK."

The April figures, to be released by the Office of National Statistics, provide a breakdown across the UK for all areas for the final quarter.

The report also warned that the current outbreak of political upheaval in the Middle East could have a knock-on effect on Scotland's fragile recovery from recession.

Economists said the Scottish recovery was at risk of "faltering" in 2011 amid uncertainty in the Middle East combined with worsening inflation, continuing weakness in bank lending and one of the harshest winters in decades.

They said the global markets are vulnerable to so-called "oil shock", as rising oil prices hit the agricultural, transport, construction and chemical sectors.

The price of oil in London rose last week to almost $120 (74) a barrel - up by 47 per cent since the end of the third quarter last year.

Brian Ashcroft, professor of economics at the University of Strathclyde, said: "The political upheaval in the Middle East, worsening inflation, continuing weakness in bank lending and the uncertain impact of fiscal consolidation all serve to cloud the picture on future growth prospects."