Scottish economy expected to improve but remains vulnerable to external factors

By ANDY PHILIP
Published on 23/11/2012 16:38

The economy is expected to pick up through next year but remains at risk from external shocks, according to the Scottish Government’s chief economist.

• Scottish economic recovery depends on UK and EU growth prospects, with 80 per cent of exports going to those markets

• Expansion of private investment seen as essential to rebalance economy

Recovery across the UK and EU is also important to future growth prospects, with about 80 per cent of Scottish exports destined for those markets, Dr Gary Gillespie said in his state of the economy report.

“As in July, we still expect the Scottish economy to return to near trend growth in 2014 as well as returning to pre-recession levels of output that year,” he said.

“However, this will depend on the euro area crisis remaining contained, an improvement in the global outlook and a pick-up in domestic economic confidence. There clearly remain risks on both the up and downside.”

The report identifies an expansion of private investment as essential to rebalance the economy.

Initiatives to support public sector capital investment and confidence should be considered, he said.

Finance Secretary John Swinney said the Scottish Government is doing all it can within its current powers.

“We have set out further investment in construction, skills and the green economy in our draft budget,” he said.

“Only last month we announced details of an additional £40 million of investment for affordable housing and help for SMEs (small and medium

enterprises) to create up to 10,000 opportunities through a national employer recruitment initiative.

“This comes on top of the £485 million additional investment we have announced since last year’s spending review and the £2.5 billion of infrastructure investment supported through the non-profit distributing pipeline.

“There is no doubt that with the full fiscal and economic powers of independence we could do more to create the best possible environment for economic success. In the absence of those powers the Chancellor must now rectify the continuing failure of his austerity agenda, stop holding Scotland back, and invest in jobs and growth.”