The third-quarter growth has been driven by the service sector – welcome news from a sector that had been struggling against the economic tide.
A 0.1 per cent revision upwards, though, is not a lot. Economic recovery, such as it is, is still fragile.
The benefits of such slow growth will take time to permeate through the business community. The fact that unemployment is on the increase in Scotland demonstrates the lack of confidence that still pervades. To increase growth, we must build business confidence. Scottish Chambers of Commerce have been working with our members to demonstrate the measures needed to help restore confidence, and we have been consistent in our calls.
Firstly, both the UK and Scottish governments must prioritise their spending to drive economic growth. We welcome the prioritisation of capital investment announced in both the UK government’s Autumn Spending Review and in the Scottish Government’s draft budget. They also both seem to recognise the urgent need to stem the tide of youth unemployment, but they must ensure they work closely with business in order to tackle this issue, as it is businesses that will create any new jobs.
Access to finance remains an issue, and difficulty obtaining finance will inhibit expansion. The banks still have to improve their performance and recognise the importance of their role. Other finance sources, though, must be better publicised to businesses, using trusted intermediaries.
The last major issue is to inject certainty about the macroeconomic situation to enable businesses to make investment decisions with confidence – including making the commitment to taking on a new employee.
We also call on the Bank of England to commit to maintaining interest rates at 0.5 per cent throughout 2012.
Whether each government decides it is pursuing a ‘Plan A’ or a ‘Plan MacB’ or any other type of plan, they must get over their differences and work together to support businesses to grow our economy.
• Liz Cameron is chief executive, Scottish Chambers of Commerce.