Second recession? There are plenty of Scots still in the first

These days, preliminary estimates are quite accurate, so the likelihood is quarterly statistics up to June will not reveal a renewed recession, yet. For all its limitations, GDP is still the most comprehensive overall measure we have of our prosperity.

But as an article in The Scotsman last week stressed, the hardest experiences of recession come through the jobs market. Unemployment can be devastating for the individual, and feeds social unrest. There were riots in nine of the ten London boroughs where youth unemployment is higher than the Scottish average.

For the economy-watcher, measuring claimant unemployment has another advantage. The figures are much more up-to-date than GDP data, and finely broken down geographically. We in Scotland won’t get our second- quarter GDP estimates until October, but we can read the July claimant figures down to datazone level, areas with a population of 600 to 800, based on the census.

UK regional figures clearly show a double dip. We had tasted the second course of the jobs recession, even before the American Tea Party and the Mediterranean Mezze put widespread regurgitation firmly on the menu for other western economies. Scotland had first sip.

Let’s analyse the first dip. The pre- recession low point in unemployment – the peak of the long boom in the UK labour economy – came in March 2008. This timing was pretty uniform across Britain, except that the north-east of England peaked two months earlier, and other northern regions and Wales one month earlier. Northern Ireland had peaked in November 2007.

Across England and Wales, the job market worsened until October 2009, give or take a month in different regions. In Scotland it went on until January 2010, and in Northern Ireland it’s still going on.

In most places there was a recovery during the pre-election period, which carried on until February this year. That wasn’t the case in London, where the recovery flatlined from last August.

Neither was it the case in Scotland or north-east England. Here the recovery stopped dead in July 2010. Our labour markets entered a second dip which, on claimant unemployed measures, is already much worse than the first. We now, after discounting the seasonal ups and downs, have 145,000 claimants north of the Border.

Of course, there are big differences across Scotland, and there are important social and business messages in those variations. Claimant figures for datazones help us get the picture. They are ranked by the Scottish Index of Multiple Deprivation, which looks not just at employment, but also at health, incomes, crime and the availability of local facilities.

The tenth of Scotland that is hardest-up isn’t having a double-dip recession. Like Northern Ireland, it never got out of the first dip. That dip started earliest, in January 2008, and in the course of it the claimant rate has risen from 6.1 per cent to 10.7 per cent.

At the other extreme, the most affluent tenth of the country had a much shorter initial downswing, and longer upswing, than most of Scotland. The un-deprived enclaves started the first dip of the recession a couple of months after everywhere else, and began the recovery three months earlier. Their economic upswing has been much more prolonged – the claimant count in the richest tenth areas only started rising again in May this year, from a level of 1.1 per cent of working age residents. Labour markets are still fairly tight for posh suburbs’ residents.

Alex Salmond’s suggestions for a UK “Plan B” recovery programme would help confront social inequalities that the datazone figures reveal. His focus on construction would provide work for people living in the poorest tenth of our country. But what Britain needs for the next few years is strategies to develop all our competitive industries. What shall we do while the world’s largest economy strangles itself with its purse strings? Maybe tomorrow’s detailed GDP statistics will give some hints.

l Hervey Gibson is chairman of Cogent Strategies International and former head of economics at Scottish Enterprise