WE HAVE become so used to bad news on the economy that whenever any encouraging news emerges, it often ends up smothered with caveats. Yesterday’s heartening new figures about Scottish economic performance were no exception.
On the face of it, here was a happy picture. The Fraser of Allander Institute upgraded its growth forecast, predicting Scotland’s economy could grow by 2.1 per cent in 2015 – that is more than twice the projected the growth this year.
In the jobs market, there is more encouragement. A fall in the number of jobless between February and April puts Scottish unemployment at 7.1 per cent, below the UK average of 7.8 per cent. The number of people claiming jobseeker’s allowance also fell, while employment increased.
Perhaps the most encouraging news of all was a further fall in youth unemployment, which while still high at 15.2 per cent is now significantly lower than the UK rate of 19.5 per cent. It would be foolish to dismiss the caveats, however. Economists such as Professor Brian Ashcroft are concerned that the full effect of the Treasury’s continuing austerity package has still to be felt – further cuts in public spending and welfare payments will need to be offset by yet more activity in the private sector if we are to have any hope of a sustained recovery.
There are worries, too, that the current level of exports leaves much to be desired. With key markets in the US and eurozone still sluggish, there is worryingly low demand abroad for Scotland’s value-added luxury brands. Strong exports will be an important part of any renaissance in Scotland’s economic fortunes.
And yet, even though it may contradict our somewhat dour national stereotype, positivity is needed here. A recovery will not happen by itself. Opportunities need to be seized and this will only come from having a positive outlook about the possibility of them bearing fruit. However stung we have been by the recession, we must dare to look on the bright side if we are to have any hope of getting back to steady growth.
Credit where it is due, some of the healthiest aspects of the economy are those that have enjoyed the support of SNP ministers. Government-funded projects such as new wind farm projects, new energy grid development, the Forth Replacement Crossing, the Edinburgh trams (although these were backed grudgingly by the SNP), and the push to build thousands of new affordable homes have all been identified as drivers of the Scottish recovery.
To keep up the momentum, Alex Salmond yesterday announced a new package of small business growth that he expects to create another 10,000 jobs for Scotland’s young people. Again, this is most welcome.
Yes, there are still barriers still to overcome, but Scotland may be entitled to look to the future with more confidence than of late.
Hester sowed the seeds for change
AS IS often the case when a senior business executive announces their resignation, the question being asked is: “Did they jump, or were they pushed?” So it is with yesterday’s departure from Royal Bank of Scotland of chief executive Stephen Hester.
Some early indications were that it was the former, rather than the latter. Mr Hester last night expressed a degree of regret about the timing of his departure, which seems to suggest it was not entirely to his liking. In a statement yesterday, the bank suggested he had been unable to make an “open-ended commitment” to the process that will eventually return the bank to the private sector.
A more accurate assessment is that Mr Hester, while being the right man for the job he has done for the past five years, is not necessarily the man needed for the very different task of returning RBS to the fray of the market.
Although he had a background in finance, Mr Hester was an executive with British Land when the government came calling and asked him to help out with the Northern Rock crisis in 2008, and a few months later take the helm of RBS. He was seen as a man who understood the banking world, but had the independence of mind to begin to reform it – a necessary qualification at a time when bankers’ reputations were being trailed through the gutter.
His tenure was not without controversy – there were criticisms that despite being a nationalised bank, RBS was not lending enough to British businesses, and was continuing to pay too much in bonuses. But Mr Hester succeeded in essential restructuring and the start of a culture change that, admittedly, may have some way to go. His successor will have an altogether different challenge.