Erikka Askeland: SNP calls for a Plan B to drive economy - but is it bold or bankrupt?

IF IT felt like the first few months of the year were eerily quiet, we now know the reason. According to the official statistics, Scottish GDP growth in the first quarter amounted to a barely discernable whisper, as if muted by an icy blanket of fog.

Growth is surely better than its opposite, which is what happened in the final quarter of 2010 when GDP slid by 0.4 per cent. But the main trouble with these new, feeble Q1 figures is that while Scotland languished in the fog of 0.1 per cent growth, the rest of the UK was getting patches of weak sunlight in the form of 0.5 per cent in the same period.

The latest GDP data also certainly puts a chiller on those jobs figures presented by the First Minister Alex Salmond last week when he was clearly pleased to reveal that in the three months until May, employment was growing and unemployment slowing, both at rates seven times better than the UK average.

But with both good figures and bad, the SNP's answer was the same: "We need a plan B." This is in essence a plea directed at the Chancellor George Osborne to let loose the reins so the that Scottish Government is free to borrow to invest in capital projects.

One of the key figures in the GDP story is construction employment, which fell 3.6 per cent in the quarter, but has been surprisingly resilient over the past year.

Finance secretary John Swinney pointed out that construction jobs increased by 11.6 per cent in the year to March, compared to a 0.2 per cent fall in the UK as a whole, underlining the government's strategy of keeping money in the sector through an allowable form of borrowing - the Scottish Futures Trust's (SFT's) non-profit distributing (NPD) programme, which has 2.5 billion to pump into a range of public sector building projects on schools, hospitals and so on. But this will no longer be enough to keep the figures afloat.

Michael Levack, the chief executive of the Scottish Building Federation, has long been a sceptic when it comes to rosy government construction industry employment figures and these latest GDP stats underline his fears that the industry is now officially in a "nose-dive".

He called for government action on bank lending, affordable housing investment and joined in on the Scottish Government's call to the Treasury for more of those Tartan borrowing powers.

The trouble with this plan B is it runs in the completely opposite direction to the Tories' "plan A for austerity", which is all about reducing the UK's borrowing, not increasing it. Although there are compelling arguments for rolling these back and thus softening their effects, the SNP would be out of step with all other western governments, including the US, which is set to make a massive shift towards deficit cutting at a vote in a few weeks' time.

Not to mention the European Union, whose currency today sits in the "last chance saloon" unless European leaders agree to trade vast bailouts for deficit cuts.

The SNP's plan is either "B for bold" to run so strongly against the tide or "B for bankrupt". Eurozone on the brink as leaders face crunch decision

JOS Manuel Barroso departed strongly from typical Brussels protocol by refusing to mince his words as European leaders prepared to meet to thrash out a plan to either save the euro or risk dragging the western economy down with it.

European leaders have so far faced criticism for their piecemeal efforts to stem the debt crisis. Germany's Angela Merkel has been hinting that today's meeting may not provide the bold statements being asked for by the capital markets, which are driving up the cost of sovereign borrowing in troubled European states to unsustainable levels.

Barroso, president of the European Commission, said: "Leaders need to come to the table saying what they can do and what they want to do and what they will do. Not what they can't do and won't do."

But what would happen if member states don't agree to the €120 billion (105bn) Greek bailout package, or the European Central Bank doesn't support the need for private investors to take haircuts? It seems attractive to many taxpayers to let Greece go hang, but most economists think this would be even more costly than the price of any bailout. Spooked investors who got burned would create contagion affecting bigger fish such as Spain and Italy.

A massive run on Greek banks would see stringent or even illegal measures imposed. The resulting downturn in Europe would risk exporters reliant on these markets such as the UK, or even China.

Russell Investments believes that any abrupt default of Greece, or even the break up of the eurozone would plunge the world back into "a calamity of Lehman-like proportions".

Or, an agreement could see a "relief rally" relying on the prospect of a slowly growing - but stable - global economy.