UK may leave Scotland mired in recession as jobs toll grows

SCOTLAND could remain in recession after the UK has pulled clear, economists have warned, as new figures showed unemployment is growing faster here than across the rest of the country.

• Seeking work at a Job Centre in Edinburgh. Picture: TSPL

An extra 9,000 Scots joined the dole queues between September and November last year, while unemployment rates across the UK as a whole fell by 7,000, the statistics showed.

Next week, Britain as a whole is expected to be declared officially out of recession, when GDP figures for the last quarter of 2009 are released.

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But analysts say that Scotland could find itself lagging behind the country as a whole as it struggles to cope with the aftermath of the financial crisis.

It comes as a gloomy business survey from the Scottish Chambers of Commerce (SCC) is published today, which warns that any recovery north of the Border will be "slow and fragile".

The survey of firms found that retailers were reporting weaker-than-expected sales in the last three months of 2009. Overall orders were also weaker than the previous quarter, and weaker than expected in the manufacturing sector.

Professor Brian Ashcroft, of the Fraser of Allander Institute, who helped collate the research, said last night:

"Our feeling is that the UK will come out of recession when figures come out next week. Will Scotland come out? It is by no means certain."

The timing of the exit from recession will be critical as the country heads to the polls, probably in May. Scottish figures on the GDP will not be published until April, just as the parties gear up to claim they have the best answer on economic recovery.

The Scottish Government last night pointed out that unemployment is still higher, at 7.8 per cent, across the UK than in Scotland, where the figure is 7.4 per cent.

However, enterprise minister Jim Mather described the increase as "disappointing", warning that it showed any recovery continues "to be a fragile process".

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In total, 202,000 Scots are out of work, a rise of 61,000 over the year. The 2.2 per cent annual rise was among the highest in the UK, with only the West Midlands and Northern Ireland having steeper increases. In the UK as a whole, 2.46 million people are jobless.

Also released yesterday, GDP figures for Scotland showed the figure shrank by 0.2 per cent between July and September, less than the 0.5 per cent cut the previous quarter but still meaning that Scotland is in recession.

It was the fifth successive quarter that the economy in Scotland has shrunk. Across the year to September as a whole, the economy fell back by 4.6 per cent, worse than the 4.4 per cent fall across the UK. The biggest decline was in construction, which was down by 8.9 per cent.

Finance secretary John Swinney insisted that the Scottish Government was "absolutely committed to investing in jobs and keeping our economy moving in these tough times".

But business groups have criticised Mr Swinney for not doing more, both to cut the government's own costs and to spend more on projects such as the Glasgow Airport Rail Link.

CBI Scotland director Iain McMillan said: "The competitiveness of and prospects for Scots firms are greatly strengthened when government keeps a tight lid on those costs under its control that affect business, and when important GDP-enhancing investments in much-needed infrastructure and support for enterprise are protected."

The scale of the continuing crisis is laid out in the SCC's survey today, which showed that most firms continue to be pessimistic about the prospects of recovery.

The survey found that cost pressures on firms were generally increasing. At the same time, orders in the last few months of 2009 were weaker than earlier in the year, especially in manufacturing and retail. At least half of retailers reported they had declining sales in the fourth quarter of 2009 and that they expected sales to fall further in the first quarter of 2010.

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In construction, only 15 per cent of firms were more confident than in the previous quarter.

The report concluded: "The fragile recovery will have to contend with a possible weakening in consumer spending, the costs of a harsh winter, the re-imposition of VAT and pressures on government expenditure."

Scottish Secretary Jim Murphy said last night: "There are some encouraging signs given the severity of what Scotland has been through, but we all have to stay 100 per cent focused on jobs."

Scottish Liberal Democrat finance spokesman, MSP Jeremy Purvis, said: "You could only conclude that Scotland's economy is being held back by the SNP."

Shadow secretary of state for Scotland, David Mundell, said: "Last week the government claimed to see signs that Scotland was coming out of recession. Today's statistics show that up for the complacent and self-serving statement that it was."

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