Comment: The story with Scotland’s economy

Martin Flanagan. Picture: Adrian Lourie

Martin Flanagan. Picture: Adrian Lourie

1
Have your say

IT HAS become a truism over decades that, economically, Scotland doesn’t experience quite the same booms or busts as elsewhere.

The pain of downturns is often less, compared to “swing” regions such as London and the south-east or, say, England’s west Midlands.

But recovery north of the Border doesn’t tend to come in an upsurge, either. It makes the latest eye-catchingly impressive Scottish growth over the summer particularly pleasing, even if the figures still fall short of that chimerical boom.

A greater proportion of Scottish businesses recorded a rise in turnover in the three months to August than has been the case over the past six years.

You have to go back to before the 2007-8 recession to see the turnover levels we are seeing now. And, if costs are kept under control, those revenues should flow through to the bottom line.

The latest business monitor from Bank of Scotland shows that it is not just that faithful old retainer, the 
dominant services sector, which has established a freshening breeze behind it.

The overall net balance of rising turnover for firms in the smaller production sector was plus 24 per cent. That is a gratifyingly, abrupt change of gear from the minus 5 per cent in the previous three months and the minus 2 per cent of the same quarter a year ago.

Volumes of repeat business lifted strongly, always an important indicator for the sustainability of spikes upward in economic activity.

Optimism has also grown in the latest survey about prospects for the next six months. The one disappointment is exports, where activity fell in the summer just gone, and where optimism is thin on the ground looking ahead.

But, with that caveat, we should be grateful the Scottish economy revved up in the summer sunshine, and hope the acceleration in recovery can be maintained.

Ed’s playing poker with giants of energy sector

TO SAY Ed Miliband has rattled the energy industry with his promise to freeze gas and electricity prices for 20 months if he wins the next election is an understatement as big as last winter’s utility bills.

Energy companies are spitting tacks publicly and aghast privately. If energy prices are officially frozen amid rising costs and green investment, it really is a case of the power industry not just playing metaphorical poker with the government and consumers, but the card table being kicked over.

Miliband wanted a tangible example of his sometimes fluffy conceptualising about “standing up to big business”, and he has found his populist voice with an easy target, the energy industry. The obvious question is when push comes to shove, if the likes of Centrica and SSE neglect to invest because of the price freeze, will the lights stay on?

That’s when the poker game could get interesting. Look at Scottish Gas-owning Centrica scrapping two gas storage projects this week after the government refused to give it a taxpayer subsidy. This is not to say Miliband is wrong to tell the energy companies something must change in an era of seemingly constantly rising bills whatever is happening to prices in the international energy market.

But it is still unclear, and probably impossible, for him to force energy companies to invest. That would make us more than ever dependent on liquefied natural gas imports as an energy backstop in a crisis.

Back to the top of the page