16/11/2011 Newsnight Scotland

something together. Good luck to Tonight on Newsnight Scotland:

More on the state of the economy. As unemployment rises in Scotland,

how do we stack up against the rest of the UK?

And Christmas is upon us, on the high street at least, but cheer is

hard to find as retail sales fall. The latest figures show the number

of people out of work in Scotland rose by 5,000 between July and

September, taking the total to 215,000. But far from being the

poor relative, what the figures also show is that Scotland is

faring better than the UK average when it comes to the rate of

unemployment. So how has Scotland been performing compared with the

rest of the country in recent years? Here's our business and

Another day and more grim news on the economy. The Bank of England's

governor says growth is sluggish this year and next year. The number

of people seeking work in Scotland was up 5,000 in July to September,

taking the total to 215,000. Across Britain it was up more steeply. But

other way of looking at Employment, those receiving jobseeker's

allowance was down in Scotland. We are used to comparing ourselves

with the rest of the UK. We started the downturn in a better position,

got worse and now we are stronger. But what is really striking is not

the difference, but how closely the Scottish economy follows the UK

average. There is no nation or region that is more typical of it

than Scotland. Take a look at this. The UK figure for unemployment and

the most recent figures is a 0.3 % of those of working age. The south-

east of England fared best. The North East did worse at 11.6.

Scotland was better than average. Look at the other side of the kind

- those in employment. The UK average is 70 %. The South East is

74 %, the North East is 65 %. Scotland is better than average of

71 %. That tells us that perhaps the 0-south divide stops at the

border. -- North-south divide. I'm joined now by Professor David

Bell of Stirling University. The basic story is it looks like the

recovery is slowing. You yes. We had a period where unemployment

rose pretty quickly in 2008, 2009. Then it levelled off and now it

looks as if we are starting on an upward trend. There is not much

good news in respect of unemployment for the next few

months certainly. A I was interested don't when looking at

some of these regional figures that Douglas was talking about there,

and it is fascinating that Scotland looks like it is just about average.

If he took the Scottish economy as a region of part of the UK, it is

about the same. -- if you took. Since the early 1990s, we have not

been far away from the UK average. I looked at the last five years of

monthly data and the region closest to the UK average, following on

from what Douglas said, is Scotland. So or us becoming average is

something that took place in the late 19 eighties -- 1980s? Yes.

This is what I mean about good news. Saying we are average sounds bad,

but compared to where we were, I wonder how many people in Scotland

know that the unemployment rate in the south-east of England is the

same as Gollum? It is a good thing because we were behind. Definitely.

When we had the industrial base that many people regret us losing,

we had higher rates of unemployment compared to England and even to

Wales at some periods in the 1980s. Again, I was looking at some of

these regional figures. To get a picture of what we look like in the

1980s, the north-east of England looks pretty bad. Wales is looking

back as well. Yes. That is the story of the 1990s and the last

decade. Scotland improves relative to those industrial parts of the UK,

like Wales, like the North East of England and to a certain extent,

the north-west. Why do you think this is? Is it because there was a

cataclysmic decline in manufacture in in Scotland in the early 1980s.

Dramatic as it was at the time, has made us more like any part of

Britain, less dependent on particular industry. There is true.

We also have the oil industry which all of the other part of the UK do

not have. We have the financial sector as well that is still there.

It is an important part of the economy, more important than the

industrial parts of the UK. The digger is more diverse economy and

as a result, that seems to have given us more resilience and placed

us in the middle of the distribution. And presumably, the

other good thing about that is that we are more flexible? Obviously it

is tragic when a business closes and hundreds of people lose their

jobs, but it is not tragic in the end of the world cents. -- sense.

That is true. Over the last few years, we have seen some major

expansions, major new investment in Scotland, but the local indigenous

economy does seem to be more resilient and it needs to be more

resilient because times are very hard now. Now, youth unemployment -

there is this headline figure across the UK. It is ambiguous. We

don't really know what the figures are, do we? Is there isn't - but is

there any reason to think youth unemployment here is any better or

worse, or is it the same? reading of the statistics is that

it is pretty much the same, that it is around a 5th of those aged 16-24

who are looking for work. That is the same as the rest of the UK, but

within Scotland, there is huge variation. Don't go away because we

will come back to later. Christmas has arrived on the high

street, but there's an edge of desperation in retailers' attempts

to persuade us to spend. Today saw retail sales figures fall slightly

compared to this time last year. But with inflation rising, at least

until recently, shoppers are getting less for their money.

Consumer spending makes up a significant proportion of the

British economy, so a Christmas on the high street could signal a

chilly New Year for us all, as David Allison reports.

The tree is going up, but what about retailers's spirits? Can you

say it is the season to be jolly when we have high inflation,

standard wages, rising unemployment and retailers begging for a decent

Christmas for once? You do not need to be an economist to realise that

shops for sale or lease on a prime retail locations are not a good

omen. So are we heading for a bloodbath when the day of reckoning

comes in January. A couple of years ago and number of the retailers

have to say our cash flows have run out and we cannot cope. But I don't

know. It hinges on what the consumer does. They certainly are

going to get some good offers and bargains. And if you were a betting

man, what would you say? I would not be surprised to see a couple of

casualties. There has been some discussion about certain parts of

the market that are finding it hard. A nativity crib has replaced the

spot where the protesters were a few weeks ago and preparations are

starting for celebrating Christmas. Certainly the council are talking

up the prospect. Almost half of the net profits of retailers are

generated over Christmas and the new year. It is critical we market

Glasgow properly and we work with the retailers to attract people

into the city for the magic of Christmas. And magic you cannot get

anywhere other than a major city like Glasgow. They even have their

own abbot to sell the city. Glasgow last Christmas. -- last Christmas.

The indicators suggest it is going to be a difficult Christmas and we

have already seen that before for his down. However, we just need to

make sure that we are at the front of a were customers' minds. -- and

won customers minds. Of course, expensive jury and Swiss watches on

the only story, but in a climate of declining sales do that past few

months, the competition for customers is intense. Ultimately,

it depends on the consumer and how he or she chooses to spend on not

to spend their money. I am more aware of what I spend. This year I

am because cities more difficult. My mum has a Christmas is cancelled

this year. And bit off an exaggeration, but we are getting

less. You have to cut back. Maybe by two of three things for your

granddaughters. You have to cut that back to one or two. It is too

expensive and you just cannot do it. We have been warned that we will

not get what we usually get because things are more expensive. We just

have not got the finances this year. Most people are frightened to spend.

They are looking at the news and what is happening. In the meantime

everyone has to hope for the best and Glasgow is certainly doing that.

They are building this new building complex. In the meantime, this

particular Christmas is looking very tough for retailers, and come

Professor David Bell is still with us, and I'm also joined by Rod

Ashley Chief Executive of the Southwest Credit Union, and

Professor Steve Burt from the Centre for the Study of Retailing

in Scotland. Tell us what is happening in your organisation, Mr

Ashley. You have seen people saving up to be able to spend something

this Christmas? Yes. It is leading on from the disasters of their pack

that we saw a few years ago. A lot of people are saving and we are

encouraging people to save for Christmas throughout the year. We

know it is coming, put some money aside. We have just recently paid

out on our special Christmas savings account, nearly a million

pounds saved up by the membership for. Who is doing this? Why don't

they put the money in the bank? are encouraging people to save with

a credit union, which is a local, ethical, community finance... We

give them a 1.5% return on their money which they are unlikely to

get from a bank, and many of the voucher schemes. But this increase,

presumably it reflects the fact that more and more people are are

worried that unless they plan ahead, they simply won't be able to have a

Christmas. That is correct. Most people know, how will they afford

Christmas, they will try to save for it. We are encouraging people

to save and not borrow, and that is a recognition of perhaps the canny

Scots in us that will save up for events. And you presumably are an

alternative to people who get involved with many lenders of less

savoury sauce. Is this a global problem? -- savoury types.

Absolutely. The proliferation of high street lenders on the high

street, the high cost of finance, quite a sizable charge of borrowing.

We are seeing, start saving now for Christmas 2012 and put a small

amount away every week, every month, and by the time it gets to this

time next year, you will have it already there. Steve, what do you

think is happening for the people trying to sell things to these

customers? It is tough. As your report showed, there is a general

caution in the market place and it is no surprise because people are

being told time and time again that we are in crisis, there is not much

money around. The price of fuel, energy bills. Everyone is getting

into that cautious feel, that they need to be careful this year.

are also seeing real effects presumably this Christmas, David,

because people's wages are being cut in real terms and perhaps they

might not notice that for a couple of years, but this has been going

on since 2008. Yes. Inflation is 5%. Wage inflation is 2.5%. People have

got a real following there in their incomes and as Steve said, there

are issues like energy prices, fuel prices. All of this means that the

residual income left for retail is less in real terms quite

significantly than it has been in the past. Presumably, just as

companies might be reluctant to invest, because they can't see any

profitable investment opportunities, people who are lucky enough to have

money they could splash out will be more reluctant to do that because

they are thinking, I don't know what will happen down the line.

Absolutely. The pall of uncertainty caused by the ongoing crisis that

we hear about is just adding to the caution. It is making shoppers much

more cautious than they had been in the past and the only way to get

them out I think is to offer very be bargains. Very big bargains. Are

we seeing a recession on the high St? There are other factors like

the internet? In economic terms, it does not matter if people spend

money in a shop or in the internet. It is a combination of factors. You

mentioned the internet, that is important when we talk about retail

sales figures on the high street. For a number of years, a lot of

Christmas shopping has been moving online. But what you are getting is

a lot more discounts and offers an squeezing of prices. Inevitably

that washes through in terms of cashflow for retailers. One of the

interesting factors today was the fact that grocery sales were not

moving. They are usually bullet proof but the signs that grocery is

stagnating is a bit of a concern in terms of traditional patterns. The

combination of some of the non-food they are selling is not going as

well as it was but it is also a real reflection of price decreases

in groceries. Are people saying to you that they feel that their

incomes are going down? Yes. No question that people's incomes are

being affected and the pressure is on to put money aside. A lot of

people are in very high levels of debt, finding it very difficult to

make mincemeat. Times are tough, no question about that. You said you

were worried because foot, it is normally -- food is normally not a

worry. Big electrical purchases, Commit went for �2 this week. The

things you can put off you do put off. That is quite attractive to

online shopping as well so you can buy those items in other places.

You get issues in some of the fashion chains. The interesting

point will be when we get to the next Wednesday, December, January,

when the retailers have to pay their rents. That is a crunch point

for a number of retailers. Presumably part of this is

psychological as well. When people watch Mervyn King saying, nothing

is given to get better until at least the middle of next year, it

is hardly a boost for confidence. Certainly not. All the signals

people are getting our of caution. That is not what we want in a way.

Also, the forecast that Mervyn King is making assumes that there is not

something catastrophic happening in the eurozone so it is almost a

best-case scenario. Yes. That there will be somewhere between zero and

very low growth for a year or so. Yes. What we have been describing

is a process of rebalancing the economy, of the public sector

trying to get out of debt and we have he been hearing about how

households have been trying to get out of debt as well. It is a long

process. It was supposed to be that we had manufacturing... Britain

reported a record trade deficit last week. That is right. Where is

the demand going to come from? Our next exports are going in the wrong

direction. Sadly, on that rather depressing note, we will have to

leave it there! Tomorrow's front pages. It leads on

No apology from the fire service. Most of the paper's lead on the

economy. The outlook for Britain worsens, say the Guardian.

The Daily Telegraph says that the Governor admits he dare not plan

ahead. And the same idea in the Independent. Pain but no game. That

is all we have time for. I will be Hello. Most of us will see some

sunshine eventually tomorrow but first thing, it could start of

pretty grey. We will see sunny spells developing across most of

England and Wales. The rain may return to Northern Ireland later on.

Sunny spells later for most of northern England and the Midlands.

Parts of East Anglia and the south- east will stay quite glam with a

bit of late sunshine in London -- will stay quite glum. In Cornwall

in particular, the breeze will increase. The same goes up for the

far west of Wales. Elsewhere in Wales, generally dry and bright.

Some sunny spells across Northern Ireland a early on but it will turn

grey it barely on with wet and windy weather for the afternoon.

Northern Scotland will start damp but it should brighten up by the

afternoon. There will be more rain to come on Friday across parts of

western Scotland and Northern Ireland. Even so, it will be mild,

temperatures above average. Much of England and Wales will be dry and

bright. There will be a brisk breeze blowing, so a bright and