This morning the Scottish government will publish its GDP figures for the first quarter of 2012 and the nation will learn whether or not its economy has slumped, like the rest of the UK, into a double-dip recession.
Although many Scottish businesses entered 2012 optimistically, last week signs of slowdown in the Scottish economy were emphasised. The latest quarterly report by The Scottish Chambers of Commerce (SCC) indicated that business activity had weakened, and with little signs of growth there was cause to view the third quarter with caution.
Shaky consumer confidence, the euro-zone debt crisis, UK austerity measures and increasing concern over the global economic slowdown have all been attributed by the SCC as contributing to the business activity decrease.
Across all sectors business confidence was portrayed as weak. This extended to the retail and service sectors. Although the SCC survey emphasised the consistent performance of the manufacturing sector, it declared that construction businesses were underperforming and general outcomes were failing to live up to expectations.
The head of policy at SCC, Garry Clark, stated that: ‘the signs, both internationally and at home, are of a slowdown and return to negative growth. With few exceptions, demand and both consumer and business confidence remain weak and the outlook for the rest of the year is one of little or no growth. It is clear that the additional stimulus of infrastructure spending must be backed up with action to ensure that Scottish-based businesses are able to reap the maximum possible benefit from these new contracts’.
The Scottish government responded swiftly to the survey with the announcement that an independent study by Ernst and Young indicated that the strongest record in the UK of inward investment in terms of job creation was to be found in Scotland. The Enterprise Minister was also eager in reminding of plans to maximise opportunities with a £105 million economic stimulus package.
PwC economists also predicted slow growth for Scotland, but expected to see an improvement in job prospects across Scotland going in to next year, with 71.1 per cent of the working age population in jobs. 0.7 per cent is all the growth the Scottish economy is expected see next year. In the rest of the UK only Wales, Northern Ireland, north-east and north-west England can look forward to a worse economic outlook. Figures released by the Scottish Retail Consortium also indicated stagnating retail sales.
Douglas Fraser, BBC Scotland’s economy editor, voiced the opinion that if the Scottish economy managed to avoid a return to recession any growth it experienced would still have been weak. He also stated that ‘a positive figure could help frail confidence levels and morale, and it would play well politically – primarily for the Scottish government.’
The GDP figures released this morning will also be a strong indication of whether Scotland will follow the rest of the UK into the troubled waters of double dip recession.
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