British economy in last chance saloon

THE leader of the UK’s largest business organisation has issued a stark warning that the economy is in the “last chance saloon” unless the decline in jobs and growth is dramatically reversed.

CBI director general John Cridland’s demand for the UK government to boost investment was seized on by industry leaders in Scotland, with calls for policies to make the country more attractive for businesses.

David Lonsdale, CBI Scotland’s assistant director, told The Scotsman that both the UK and Scottish governments should do “everything possible” to boost investment in the economy.

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The call came after newly released figures showed that the number of Scots out of work had soared by 5,000 to 215,000 between July and September this year.

Mr Cridland, speaking ahead of next week’s CBI national conference in London, said government action was needed to boost investment, help firms trade overseas and improve the business environment.

He said he would be disappointed if Chancellor George Osborne did not respond to a series of CBI policy papers when he unveils his autumn statement on 29 November.

Mr Cridland said firms wanted to see infrastructure improved, including more toll roads, and warned that Westminster had scored an “own goal” with plans to introduce a carbon floor price, which he said could see companies switch production overseas.

Despite his criticism, Mr Cridland said the coalition had worked for business because firms agreed the most important priority was to press ahead with the deficit reduction, as well as reducing business taxes.

Mr Cridland said the CBI had enjoyed good access to ministers under the previous Labour governments, adding that he was “particularly pleased” with the present dialogue with the Treasury.

He denied there was any significance to the fact that no-one from Labour’s front bench has been invited to address the CBI’s conference, saying that the event this year was focused on business issues.

Mr Lonsdale, meanwhile, called for a “far bolder” approach from the Scottish Government over the economy, as he appealed to ministers to scrap controversial plans for a super- market tax.

He said: “It is not just the UK administration which needs to take action. The devolved government’s budget for the next three years must be improved in order to better galvanise growth.

“A far bolder approach to making savings is required, to release monies for further investment in infrastructure and export support but also so that its two new taxes – on retailers and firms with empty premises – can be scrapped.

“Scottish ministers should be doing everything possible to make it easier and more attractive for businesses to invest and create jobs in Scotland, not more expensive with their £146 million tax grab.”

Another Scottish business leader called on the Scottish and UK governments to work together to encourage firms to increase investment north of the Border.

Colin Borland, public affairs manager for the Federation of Small Businesses in Scotland, said: “I agree with the thrust of the comments from the CBI director general, as we are in the middle of an incredibly long economic downturn. The unemployment figures in Scotland are incredibly worrying, but I’m confident in the capacity of Scottish businesses to drive a recovery and create the growth we need.

“But to do this we need proper enterprise support from the UK government, the Scottish Government and local councils, as all of them have economic powers and the capacity to support business.”

He said it was vital firms had easy access to finance. “It needs to be easier for small businesses to get credit from banks so that they can create jobs and invest,” he said. “More needs to be done to encourage people to become self-employed to boost the Scottish economy during this difficult time.”

Scottish Labour finance spokesman Richard Baker called on the SNP government to speed-up investment in major infrastructure projects to support job creation and economic growth.

He said: “The comments from the CBI director general show the huge concern there is among business about the direction and approach of the UK and Scottish governments in terms of the economic policies being pursued.

“We are seeing higher levels of unemployment in Scotland, and in the UK the jobless figure also remains high. There’s a need for a plan B from the Chancellor George Osborne in terms of action to boost investment in the economy.

“In Scotland, we also have a situation where Alex Salmond and his finance minister talk a lot about alternative economic strategies, but at the same time they are presiding over an increase in unemployment.

“The key thing ministers must do is to end delays to major infrastructure projects like the Borders railway scheme and the Aberdeen bypass, schemes that would create jobs and boost the economy.”

However, finance secretary John Swinney defended the SNP government’s economic record and said the economy north of the Border was out-performing the rest of the UK.

He said: “The UK government cannot ignore the consensus and clamour for change.

“While the Scottish labour market continues to outperform the UK as a whole – with lower unemployment, higher employment, and lower economic in-activity rates – there is an urgent need for the UK government to deliver a “plan MacB” approach immediately, to ensure that the recovery being built in Scotland is not derailed by Westminster’s wrong-headed economic policy.”