:00:09. > :00:12.something together. Good luck to Tonight on Newsnight Scotland:
:00:12. > :00:15.More on the state of the economy. As unemployment rises in Scotland,
:00:15. > :00:19.how do we stack up against the rest of the UK?
:00:19. > :00:24.And Christmas is upon us, on the high street at least, but cheer is
:00:24. > :00:27.hard to find as retail sales fall. The latest figures show the number
:00:27. > :00:31.of people out of work in Scotland rose by 5,000 between July and
:00:31. > :00:34.September, taking the total to 215,000. But far from being the
:00:34. > :00:37.poor relative, what the figures also show is that Scotland is
:00:37. > :00:41.faring better than the UK average when it comes to the rate of
:00:41. > :00:43.unemployment. So how has Scotland been performing compared with the
:00:43. > :00:53.rest of the country in recent years? Here's our business and
:00:53. > :00:59.
:00:59. > :01:04.Another day and more grim news on the economy. The Bank of England's
:01:04. > :01:09.governor says growth is sluggish this year and next year. The number
:01:09. > :01:15.of people seeking work in Scotland was up 5,000 in July to September,
:01:15. > :01:22.taking the total to 215,000. Across Britain it was up more steeply. But
:01:22. > :01:26.other way of looking at Employment, those receiving jobseeker's
:01:26. > :01:30.allowance was down in Scotland. We are used to comparing ourselves
:01:30. > :01:37.with the rest of the UK. We started the downturn in a better position,
:01:37. > :01:41.got worse and now we are stronger. But what is really striking is not
:01:41. > :01:46.the difference, but how closely the Scottish economy follows the UK
:01:46. > :01:50.average. There is no nation or region that is more typical of it
:01:50. > :01:56.than Scotland. Take a look at this. The UK figure for unemployment and
:01:56. > :02:02.the most recent figures is a 0.3 % of those of working age. The south-
:02:02. > :02:07.east of England fared best. The North East did worse at 11.6.
:02:07. > :02:14.Scotland was better than average. Look at the other side of the kind
:02:14. > :02:19.- those in employment. The UK average is 70 %. The South East is
:02:19. > :02:25.74 %, the North East is 65 %. Scotland is better than average of
:02:25. > :02:33.71 %. That tells us that perhaps the 0-south divide stops at the
:02:33. > :02:43.border. -- North-south divide. I'm joined now by Professor David
:02:43. > :02:43.
:02:43. > :02:47.Bell of Stirling University. The basic story is it looks like the
:02:47. > :02:55.recovery is slowing. You yes. We had a period where unemployment
:02:55. > :02:58.rose pretty quickly in 2008, 2009. Then it levelled off and now it
:02:58. > :03:04.looks as if we are starting on an upward trend. There is not much
:03:04. > :03:07.good news in respect of unemployment for the next few
:03:07. > :03:11.months certainly. A I was interested don't when looking at
:03:11. > :03:19.some of these regional figures that Douglas was talking about there,
:03:19. > :03:23.and it is fascinating that Scotland looks like it is just about average.
:03:23. > :03:33.If he took the Scottish economy as a region of part of the UK, it is
:03:33. > :03:38.
:03:38. > :03:43.about the same. -- if you took. Since the early 1990s, we have not
:03:43. > :03:49.been far away from the UK average. I looked at the last five years of
:03:49. > :03:54.monthly data and the region closest to the UK average, following on
:03:54. > :04:03.from what Douglas said, is Scotland. So or us becoming average is
:04:03. > :04:07.something that took place in the late 19 eighties -- 1980s? Yes.
:04:08. > :04:16.This is what I mean about good news. Saying we are average sounds bad,
:04:16. > :04:22.but compared to where we were, I wonder how many people in Scotland
:04:22. > :04:28.know that the unemployment rate in the south-east of England is the
:04:28. > :04:34.same as Gollum? It is a good thing because we were behind. Definitely.
:04:34. > :04:40.When we had the industrial base that many people regret us losing,
:04:40. > :04:44.we had higher rates of unemployment compared to England and even to
:04:44. > :04:50.Wales at some periods in the 1980s. Again, I was looking at some of
:04:51. > :04:55.these regional figures. To get a picture of what we look like in the
:04:55. > :05:00.1980s, the north-east of England looks pretty bad. Wales is looking
:05:00. > :05:07.back as well. Yes. That is the story of the 1990s and the last
:05:07. > :05:12.decade. Scotland improves relative to those industrial parts of the UK,
:05:12. > :05:17.like Wales, like the North East of England and to a certain extent,
:05:17. > :05:21.the north-west. Why do you think this is? Is it because there was a
:05:21. > :05:28.cataclysmic decline in manufacture in in Scotland in the early 1980s.
:05:28. > :05:33.Dramatic as it was at the time, has made us more like any part of
:05:33. > :05:39.Britain, less dependent on particular industry. There is true.
:05:39. > :05:44.We also have the oil industry which all of the other part of the UK do
:05:44. > :05:48.not have. We have the financial sector as well that is still there.
:05:48. > :05:53.It is an important part of the economy, more important than the
:05:53. > :05:59.industrial parts of the UK. The digger is more diverse economy and
:05:59. > :06:02.as a result, that seems to have given us more resilience and placed
:06:02. > :06:08.us in the middle of the distribution. And presumably, the
:06:08. > :06:12.other good thing about that is that we are more flexible? Obviously it
:06:12. > :06:22.is tragic when a business closes and hundreds of people lose their
:06:22. > :06:23.
:06:23. > :06:29.jobs, but it is not tragic in the end of the world cents. -- sense.
:06:29. > :06:35.That is true. Over the last few years, we have seen some major
:06:35. > :06:38.expansions, major new investment in Scotland, but the local indigenous
:06:38. > :06:43.economy does seem to be more resilient and it needs to be more
:06:43. > :06:48.resilient because times are very hard now. Now, youth unemployment -
:06:48. > :06:53.there is this headline figure across the UK. It is ambiguous. We
:06:53. > :06:57.don't really know what the figures are, do we? Is there isn't - but is
:06:57. > :07:03.there any reason to think youth unemployment here is any better or
:07:03. > :07:10.worse, or is it the same? reading of the statistics is that
:07:10. > :07:14.it is pretty much the same, that it is around a 5th of those aged 16-24
:07:14. > :07:24.who are looking for work. That is the same as the rest of the UK, but
:07:24. > :07:25.
:07:25. > :07:29.within Scotland, there is huge variation. Don't go away because we
:07:29. > :07:31.will come back to later. Christmas has arrived on the high
:07:31. > :07:34.street, but there's an edge of desperation in retailers' attempts
:07:34. > :07:37.to persuade us to spend. Today saw retail sales figures fall slightly
:07:37. > :07:39.compared to this time last year. But with inflation rising, at least
:07:39. > :07:42.until recently, shoppers are getting less for their money.
:07:42. > :07:45.Consumer spending makes up a significant proportion of the
:07:45. > :07:53.British economy, so a Christmas on the high street could signal a
:07:53. > :08:03.chilly New Year for us all, as David Allison reports.
:08:03. > :08:07.
:08:07. > :08:11.The tree is going up, but what about retailers's spirits? Can you
:08:11. > :08:15.say it is the season to be jolly when we have high inflation,
:08:15. > :08:21.standard wages, rising unemployment and retailers begging for a decent
:08:21. > :08:26.Christmas for once? You do not need to be an economist to realise that
:08:26. > :08:31.shops for sale or lease on a prime retail locations are not a good
:08:31. > :08:35.omen. So are we heading for a bloodbath when the day of reckoning
:08:36. > :08:42.comes in January. A couple of years ago and number of the retailers
:08:42. > :08:47.have to say our cash flows have run out and we cannot cope. But I don't
:08:48. > :08:53.know. It hinges on what the consumer does. They certainly are
:08:53. > :08:59.going to get some good offers and bargains. And if you were a betting
:08:59. > :09:03.man, what would you say? I would not be surprised to see a couple of
:09:03. > :09:13.casualties. There has been some discussion about certain parts of
:09:13. > :09:13.
:09:13. > :09:21.the market that are finding it hard. A nativity crib has replaced the
:09:21. > :09:24.spot where the protesters were a few weeks ago and preparations are
:09:24. > :09:30.starting for celebrating Christmas. Certainly the council are talking
:09:30. > :09:36.up the prospect. Almost half of the net profits of retailers are
:09:36. > :09:41.generated over Christmas and the new year. It is critical we market
:09:41. > :09:44.Glasgow properly and we work with the retailers to attract people
:09:44. > :09:51.into the city for the magic of Christmas. And magic you cannot get
:09:51. > :10:01.anywhere other than a major city like Glasgow. They even have their
:10:01. > :10:04.
:10:04. > :10:08.own abbot to sell the city. Glasgow last Christmas. -- last Christmas.
:10:08. > :10:13.The indicators suggest it is going to be a difficult Christmas and we
:10:13. > :10:23.have already seen that before for his down. However, we just need to
:10:23. > :10:24.
:10:24. > :10:30.make sure that we are at the front of a were customers' minds. -- and
:10:30. > :10:35.won customers minds. Of course, expensive jury and Swiss watches on
:10:35. > :10:39.the only story, but in a climate of declining sales do that past few
:10:39. > :10:45.months, the competition for customers is intense. Ultimately,
:10:45. > :10:51.it depends on the consumer and how he or she chooses to spend on not
:10:51. > :10:57.to spend their money. I am more aware of what I spend. This year I
:10:57. > :11:03.am because cities more difficult. My mum has a Christmas is cancelled
:11:03. > :11:09.this year. And bit off an exaggeration, but we are getting
:11:09. > :11:19.less. You have to cut back. Maybe by two of three things for your
:11:19. > :11:19.
:11:19. > :11:24.granddaughters. You have to cut that back to one or two. It is too
:11:24. > :11:30.expensive and you just cannot do it. We have been warned that we will
:11:30. > :11:39.not get what we usually get because things are more expensive. We just
:11:39. > :11:46.have not got the finances this year. Most people are frightened to spend.
:11:46. > :11:51.They are looking at the news and what is happening. In the meantime
:11:51. > :11:58.everyone has to hope for the best and Glasgow is certainly doing that.
:11:58. > :12:03.They are building this new building complex. In the meantime, this
:12:03. > :12:13.particular Christmas is looking very tough for retailers, and come
:12:13. > :12:20.
:12:20. > :12:23.Professor David Bell is still with us, and I'm also joined by Rod
:12:23. > :12:25.Ashley Chief Executive of the Southwest Credit Union, and
:12:25. > :12:31.Professor Steve Burt from the Centre for the Study of Retailing
:12:31. > :12:36.in Scotland. Tell us what is happening in your organisation, Mr
:12:36. > :12:42.Ashley. You have seen people saving up to be able to spend something
:12:42. > :12:47.this Christmas? Yes. It is leading on from the disasters of their pack
:12:47. > :12:51.that we saw a few years ago. A lot of people are saving and we are
:12:51. > :12:57.encouraging people to save for Christmas throughout the year. We
:12:57. > :13:03.know it is coming, put some money aside. We have just recently paid
:13:03. > :13:07.out on our special Christmas savings account, nearly a million
:13:07. > :13:12.pounds saved up by the membership for. Who is doing this? Why don't
:13:12. > :13:18.they put the money in the bank? are encouraging people to save with
:13:18. > :13:22.a credit union, which is a local, ethical, community finance... We
:13:22. > :13:30.give them a 1.5% return on their money which they are unlikely to
:13:30. > :13:34.get from a bank, and many of the voucher schemes. But this increase,
:13:34. > :13:38.presumably it reflects the fact that more and more people are are
:13:38. > :13:48.worried that unless they plan ahead, they simply won't be able to have a
:13:48. > :13:52.Christmas. That is correct. Most people know, how will they afford
:13:52. > :13:58.Christmas, they will try to save for it. We are encouraging people
:13:58. > :14:04.to save and not borrow, and that is a recognition of perhaps the canny
:14:04. > :14:09.Scots in us that will save up for events. And you presumably are an
:14:09. > :14:15.alternative to people who get involved with many lenders of less
:14:15. > :14:20.savoury sauce. Is this a global problem? -- savoury types.
:14:20. > :14:25.Absolutely. The proliferation of high street lenders on the high
:14:25. > :14:31.street, the high cost of finance, quite a sizable charge of borrowing.
:14:31. > :14:35.We are seeing, start saving now for Christmas 2012 and put a small
:14:35. > :14:41.amount away every week, every month, and by the time it gets to this
:14:41. > :14:46.time next year, you will have it already there. Steve, what do you
:14:46. > :14:52.think is happening for the people trying to sell things to these
:14:52. > :14:56.customers? It is tough. As your report showed, there is a general
:14:56. > :15:02.caution in the market place and it is no surprise because people are
:15:02. > :15:07.being told time and time again that we are in crisis, there is not much
:15:07. > :15:13.money around. The price of fuel, energy bills. Everyone is getting
:15:13. > :15:18.into that cautious feel, that they need to be careful this year.
:15:19. > :15:24.are also seeing real effects presumably this Christmas, David,
:15:24. > :15:28.because people's wages are being cut in real terms and perhaps they
:15:28. > :15:38.might not notice that for a couple of years, but this has been going
:15:38. > :15:42.
:15:42. > :15:48.on since 2008. Yes. Inflation is 5%. Wage inflation is 2.5%. People have
:15:48. > :15:54.got a real following there in their incomes and as Steve said, there
:15:54. > :15:59.are issues like energy prices, fuel prices. All of this means that the
:15:59. > :16:06.residual income left for retail is less in real terms quite
:16:06. > :16:11.significantly than it has been in the past. Presumably, just as
:16:11. > :16:15.companies might be reluctant to invest, because they can't see any
:16:15. > :16:19.profitable investment opportunities, people who are lucky enough to have
:16:19. > :16:24.money they could splash out will be more reluctant to do that because
:16:24. > :16:31.they are thinking, I don't know what will happen down the line.
:16:31. > :16:37.Absolutely. The pall of uncertainty caused by the ongoing crisis that
:16:37. > :16:41.we hear about is just adding to the caution. It is making shoppers much
:16:41. > :16:49.more cautious than they had been in the past and the only way to get
:16:49. > :16:57.them out I think is to offer very be bargains. Very big bargains. Are
:16:57. > :17:07.we seeing a recession on the high St? There are other factors like
:17:07. > :17:13.the internet? In economic terms, it does not matter if people spend
:17:13. > :17:17.money in a shop or in the internet. It is a combination of factors. You
:17:17. > :17:22.mentioned the internet, that is important when we talk about retail
:17:22. > :17:26.sales figures on the high street. For a number of years, a lot of
:17:26. > :17:32.Christmas shopping has been moving online. But what you are getting is
:17:32. > :17:38.a lot more discounts and offers an squeezing of prices. Inevitably
:17:38. > :17:42.that washes through in terms of cashflow for retailers. One of the
:17:42. > :17:47.interesting factors today was the fact that grocery sales were not
:17:47. > :17:52.moving. They are usually bullet proof but the signs that grocery is
:17:52. > :17:55.stagnating is a bit of a concern in terms of traditional patterns. The
:17:55. > :18:00.combination of some of the non-food they are selling is not going as
:18:00. > :18:04.well as it was but it is also a real reflection of price decreases
:18:05. > :18:10.in groceries. Are people saying to you that they feel that their
:18:10. > :18:15.incomes are going down? Yes. No question that people's incomes are
:18:15. > :18:20.being affected and the pressure is on to put money aside. A lot of
:18:20. > :18:26.people are in very high levels of debt, finding it very difficult to
:18:26. > :18:35.make mincemeat. Times are tough, no question about that. You said you
:18:35. > :18:45.were worried because foot, it is normally -- food is normally not a
:18:45. > :18:46.
:18:46. > :18:52.worry. Big electrical purchases, Commit went for �2 this week. The
:18:52. > :18:57.things you can put off you do put off. That is quite attractive to
:18:57. > :19:02.online shopping as well so you can buy those items in other places.
:19:02. > :19:07.You get issues in some of the fashion chains. The interesting
:19:07. > :19:12.point will be when we get to the next Wednesday, December, January,
:19:12. > :19:16.when the retailers have to pay their rents. That is a crunch point
:19:16. > :19:22.for a number of retailers. Presumably part of this is
:19:22. > :19:26.psychological as well. When people watch Mervyn King saying, nothing
:19:26. > :19:31.is given to get better until at least the middle of next year, it
:19:31. > :19:38.is hardly a boost for confidence. Certainly not. All the signals
:19:38. > :19:44.people are getting our of caution. That is not what we want in a way.
:19:44. > :19:48.Also, the forecast that Mervyn King is making assumes that there is not
:19:48. > :19:55.something catastrophic happening in the eurozone so it is almost a
:19:55. > :20:01.best-case scenario. Yes. That there will be somewhere between zero and
:20:01. > :20:06.very low growth for a year or so. Yes. What we have been describing
:20:06. > :20:10.is a process of rebalancing the economy, of the public sector
:20:10. > :20:14.trying to get out of debt and we have he been hearing about how
:20:14. > :20:20.households have been trying to get out of debt as well. It is a long
:20:20. > :20:25.process. It was supposed to be that we had manufacturing... Britain
:20:25. > :20:32.reported a record trade deficit last week. That is right. Where is
:20:32. > :20:37.the demand going to come from? Our next exports are going in the wrong
:20:37. > :20:42.direction. Sadly, on that rather depressing note, we will have to
:20:42. > :20:52.leave it there! Tomorrow's front pages. It leads on
:20:52. > :20:52.
:20:52. > :21:01.No apology from the fire service. Most of the paper's lead on the
:21:01. > :21:05.economy. The outlook for Britain worsens, say the Guardian.
:21:05. > :21:11.The Daily Telegraph says that the Governor admits he dare not plan
:21:11. > :21:21.ahead. And the same idea in the Independent. Pain but no game. That
:21:21. > :21:24.
:21:24. > :21:28.is all we have time for. I will be Hello. Most of us will see some
:21:28. > :21:33.sunshine eventually tomorrow but first thing, it could start of
:21:33. > :21:38.pretty grey. We will see sunny spells developing across most of
:21:38. > :21:43.England and Wales. The rain may return to Northern Ireland later on.
:21:43. > :21:47.Sunny spells later for most of northern England and the Midlands.
:21:47. > :21:53.Parts of East Anglia and the south- east will stay quite glam with a
:21:54. > :21:59.bit of late sunshine in London -- will stay quite glum. In Cornwall
:21:59. > :22:04.in particular, the breeze will increase. The same goes up for the
:22:04. > :22:08.far west of Wales. Elsewhere in Wales, generally dry and bright.
:22:08. > :22:13.Some sunny spells across Northern Ireland a early on but it will turn
:22:13. > :22:17.grey it barely on with wet and windy weather for the afternoon.
:22:17. > :22:23.Northern Scotland will start damp but it should brighten up by the
:22:23. > :22:28.afternoon. There will be more rain to come on Friday across parts of
:22:28. > :22:32.western Scotland and Northern Ireland. Even so, it will be mild,
:22:32. > :22:38.temperatures above average. Much of England and Wales will be dry and
:22:38. > :22:43.bright. There will be a brisk breeze blowing, so a bright and