Predictions of Scotland’s economic growth has been forced into retreat as experts downgrade their predictions in response to a world that is “stumbling deeper into crisis”, says leading debt solutions company ScottishTrustDeed.co.uk.
Far from achieving the previous 1.1% growth predictions made only months ago, Scotland is now forecast to reach just 0.3% in 2012 according to Ernst & Young’s Scottish Item Club think-tank.
Companies are stockpiling cash rather than making investments, and public sector growth has increased just 1.6% since 2007, way behind the UK which stands at 4.6%. When combined with central government and local authority employment falling faster than normal over the last four years, around 10% in local authorities and 4% in local government, it paints a bleak picture for the future.
Senior adviser to the Scottish Item Club, Dougie Adams, warned: “There are fears that the world is stumbling deeper into crisis. The eurozone dilemma has entered a dangerous new phase, questions are being asked of China’s ability to avoid a property-driven hard landing and the US recovery can be described as lacklustre at best. Scotland’s weaker public sector performance plays a part in explaining why the country has lost a disproportionate amount of jobs since the beginning of the crisis.”
However, it’s not just the public sector that has acted as a barrier to Scotland achieving a healthy growth. While the construction and business services industry are forecast to grow slightly by 0.6% and 2% respectively, the Item Club predicts manufacturing output will stagnate in 2012. In addition, Scotland has only a small number of exporting companies and this has meant that sales opportunities abroad cannot be capitalised on, despite the success of the whisky industry and advantages presented by the fall in sterling.
Jim Bishop, Ernst & Young’s Scotland senior partner, said: “This will limit growth in the medium term unless more Scottish companies invest in the exploration of development of emerging export markets, or more export-orientated companies can be lured to the country.”
This predicted lack of growth would seem to be confirmed by a recent report by accountancy firm Deloitte, which found that just over half of the chief financial officers of private equity-backed businesses are confident about the growth of their firms compared to 70% when asked last year.
A spokesperson from leading Trust Deed Scotland Company, Scottishtrustdeed.co.uk, said: “This is a real blow for the Scottish economy and for the Scottish people. After achieving only 0.4% growth in 2011, the sense of optimism that the healthier predictions for 2012 generated gave some hope that things were finally looking up after years of bleak forecasts.”
“Growth means jobs, and for a cash-strapped population the promise of relief from grinding debt that’s dogged many for years now. For a section of Scottish society, the next 12 months of poor economic growth and few employment opportunities will be too much for them. We can expect to see a rise in the number of sequestrations, awards of Trust Deeds and registrations for the Debt Arrangement Scheme before the year is out,” concluded the spokesperson.