:00:10. > :00:14.Tonight on Newsnight Scotland: Unemployment is up, sales are down
:00:14. > :00:20.and growth is sluggish. So how do we kick-start our sluggish economy?
:00:20. > :00:23.Can Plan A, Plan B or Plan MacB save us now?
:00:23. > :00:28.Good evening. The best you can say about today's economic statistics
:00:28. > :00:31.is that we are not actually in recession yet. The politicians at
:00:31. > :00:34.Westminster and Holyrood have insisted that their way is the only
:00:34. > :00:37.way to manage the economy. Have they both failed, or should we be
:00:37. > :00:47.grateful that the country is keeping its head above water as the
:00:47. > :00:48.
:00:48. > :00:52.crisis in the euro rages on? Unlike much of the Eurozone, we are
:00:52. > :00:57.not in recession. But apart from that, there is not much to cheer
:00:57. > :01:02.about. The Scottish economy has grown by 0.5%, matching the rest of
:01:02. > :01:09.the UK, but the outlook remains difficult. In Scotland,
:01:09. > :01:12.unemployment is at 231,000, up by 90,000, amounting to 8.6%.
:01:12. > :01:16.Christmas is the most important time of the year for the retail
:01:16. > :01:22.sector, but according to the Scottish Retail Consortium,
:01:22. > :01:26.December was the worst since 1999. You would expect sales to be on in
:01:26. > :01:34.January. But the sales have now been on since the end of November
:01:34. > :01:40.in some cases. On a street like this in Glasgow, there are Sale
:01:40. > :01:45.signs on both sides. A building he has been unoccupied for months.
:01:45. > :01:48.Overall, big cities and large shopping centres seem to have coped.
:01:48. > :01:55.But here in Paisley, despite the best efforts of the local council,
:01:55. > :01:59.things are not so good. Take this fake shop front for a toy shop.
:01:59. > :02:09.They want to give the impression that things are happening. They are
:02:09. > :02:09.
:02:09. > :02:18.not the only ones. Five closed shops in a row. It makes you feel
:02:18. > :02:24.dejected. Depressed. It is meant to be one of the proudest towns in
:02:24. > :02:31.Scotland. All the bigger stores have taken everything away. It is a
:02:31. > :02:34.shame, because it used to be such a nice shopping area. So there is a
:02:34. > :02:39.real gap which has opened up between large cities and the
:02:39. > :02:43.smaller towns which surround them. The impact on local high streets is
:02:43. > :02:50.worrying Scotland's business community. The retail offering in
:02:50. > :02:54.Glasgow and Edinburgh is very strong. We want to ensure that that
:02:54. > :02:58.continues, obviously. They are competing not just at UK level, but
:02:58. > :03:03.internationally. The question is how we maintain viability of town
:03:03. > :03:08.centres across the country. Retail may be part of that solution, but
:03:08. > :03:12.it is not the whole solution. the council is not taking things
:03:12. > :03:17.lying down. They have ambitions for the future, with the second phase
:03:17. > :03:21.of various developments alongside the existing shopping centre and
:03:21. > :03:26.the pedestrianisation. But if you build its, will they come? 2012
:03:27. > :03:30.will be difficult. We know that coming out of a recession rooted in
:03:30. > :03:35.high levels of debt, we will gets low levels of growth. That is the
:03:35. > :03:39.best we can hope for. If things go badly with the Eurozone, we could
:03:39. > :03:43.be dragged into recession. So there is grim news on the jobs front, on
:03:43. > :03:47.the retail sector and consumer confidence. The only hopeful sign
:03:47. > :03:51.is that we have not slipped into a double dip recession. We are
:03:51. > :03:54.hanging on by 0.5%. I am joined now by the economist
:03:54. > :03:57.John McLaren from the Centre for Public Policy for Regions at
:03:57. > :04:00.Glasgow University, by the general manager of the St Enoch's shopping
:04:00. > :04:10.centre in Glasgow, Susan Nicol, and assistant secretary of the STUC,
:04:10. > :04:16.
:04:16. > :04:23.Stephen Boyd. John McLaren, let's begin with you. The biggest
:04:23. > :04:28.question from that report was, are we heading back into recession?
:04:28. > :04:34.are looking at low growth of about 1% this year for Scotland.
:04:34. > :04:38.Prospects are similar to those of the UK, under 1% growth. Thereafter,
:04:38. > :04:45.most forecasters are projected to rise. But that is just because
:04:45. > :04:50.forecasters do that. They go back to the norm of two to be learned or
:04:50. > :04:55.3%. But something will have to change. Either consumers will have
:04:55. > :04:59.to become more confident or investment will have to improve.
:04:59. > :05:03.you look at the blizzard of statistics we have seen today, it
:05:03. > :05:08.seems as if the economy fell off a cliff in 2008, and we are still at
:05:08. > :05:14.the bottom of the cliff? No, we have come back a bit. We have come
:05:14. > :05:18.back about half the distance. But unlike in previous recessions,
:05:18. > :05:28.where you were confident of the dip and then the coming back up, with
:05:28. > :05:34.this one, we are less certain. We have been flatlining for a while,
:05:34. > :05:38.and that is forecast to continue for the next year. You can see
:05:38. > :05:43.where a negative impact could come from, for example with the Eurozone,
:05:43. > :05:48.which could take you into a second dip and prove even more problematic.
:05:48. > :05:53.One of the political narratives of the last year has been to say that
:05:53. > :05:56.Scotland was outperforming the rest of the UK. But it seems to have
:05:56. > :06:00.gone into a more traditional position now? At there is very
:06:00. > :06:05.little difference between the performance of Scotland and the UK
:06:05. > :06:11.as a whole, certainly in terms of GDP. Slightly less of a downturn
:06:11. > :06:15.for Scotland, but then slower growth coming out of the trough of
:06:15. > :06:19.the recession. Employment has been different. Scotland did very badly
:06:19. > :06:26.just after the recession, much worse than the UK, but then bounced
:06:26. > :06:29.back. But now it has turned a bit again. But overall, Scotland's
:06:29. > :06:33.labour market position is slightly worse than before it went into the
:06:33. > :06:40.recession. Before the recession, we were doing better than the UK. Now
:06:40. > :06:43.we are about the same. Susan, we heard from the Scottish Retail
:06:43. > :06:50.Consortium saying that last month was the worst December they have
:06:50. > :06:54.had since 1999. Was that your experience? No, actually, but then
:06:54. > :07:01.we have invested millions of pounds, so we expect some up to and from
:07:01. > :07:10.that. We were 8% a bin fought for on the month. -- our football was
:07:10. > :07:16.8% up. Retailers went into sale season very early, and the upturn
:07:16. > :07:22.of that has been a much slower market in January. I think retail
:07:22. > :07:25.will never be what it has been before. It has to move on. The
:07:25. > :07:35.impact of the internet and the prolonged recession is changing
:07:35. > :07:35.
:07:35. > :07:39.things. Do you think we will find out that demand in the high street
:07:39. > :07:44.has been met by online sales? We do not have statistics for the last
:07:44. > :07:49.few weeks yet. I do think that internet sales have increased
:07:49. > :07:57.rapidly. That is not going to change. We will just have to accept
:07:57. > :08:04.that. Retail will have to change. What about confidence about those
:08:04. > :08:10.coming into your shopping centre? How confident are they? They are
:08:10. > :08:16.chasing bargains. Confidence, it is hard to make them part with cash.
:08:16. > :08:20.It is tough. Confidence is low. Stephen Boyd, in terms of
:08:20. > :08:24.employment, this is a big issue for the STUC. Over the last year, the
:08:24. > :08:30.UK government have stuck to their cuts programme and the Scottish
:08:30. > :08:39.government have said we should have a Plan MacB. Given these latest
:08:39. > :08:46.statistics, do you think Plan A or Plan MacB have had any success?
:08:46. > :08:53.Plan A has had no success, certainly. The markets were not
:08:53. > :08:56.demanding cuts. The UK economy was supply-side constrained, and the
:08:56. > :08:59.Government were preventing companies from investing. The
:09:00. > :09:05.assumption was that if you cut public spending, the private sector
:09:05. > :09:12.would fill that gap. It was never going to happen. Could the state
:09:12. > :09:17.fill that gap? They could spend and borrow more, but would it make up
:09:17. > :09:22.for the collapse in consumer confidence? That is an important
:09:22. > :09:27.point. It is not just public spending that has been cut. We are
:09:27. > :09:33.also seeing wages falling. We have seen real household income at its
:09:33. > :09:41.lowest level for modern times. There is reduced confidence in the
:09:41. > :09:45.economy and we have seen the impact of consumer confidence on spending.
:09:45. > :09:50.More has to happen, certainly. But it is difficult to see how we can
:09:50. > :09:56.get out of this without the UK government filling the gap they
:09:56. > :10:02.have created. Alex Salmond talks about spending money on
:10:02. > :10:05.infrastructure. Is that what you mean? Absolutely. One of the great
:10:05. > :10:10.ironies of the recession is that we are told the markets were demanding
:10:10. > :10:14.these public spending cuts. We are told this by those whose ideology
:10:14. > :10:19.tells us we should be looking at prices that the market sets. If you
:10:19. > :10:25.look at the prices the market sets on UK government debt, the market
:10:25. > :10:29.is screaming for the Government to bring forward spending and boost
:10:29. > :10:36.the long-term productive capacity of the economy. They have to be
:10:37. > :10:39.spending out to create jobs. John McLaren, do we have an example of a
:10:39. > :10:43.country where they are still spending and they have managed to
:10:43. > :10:47.mitigate against the worst effects of a recession? If you look at the
:10:47. > :10:52.US, where they have kept their stimulus up, there are some poor
:10:52. > :10:57.economic statistics coming out. There was some stimulus there, and
:10:57. > :11:02.it was huge. But because they do not have many automatic stabilisers,
:11:02. > :11:05.the scale of it was similar to the UK's. But we still have this
:11:05. > :11:09.austerity versus growth conundrum which is at the centre of what most
:11:09. > :11:14.countries are doing. The markets and politicians are searching for
:11:14. > :11:19.good growth prospects, but they are also seeking an sometimes rewarding
:11:19. > :11:27.tough austerity measures. But those measures are likely to lead to
:11:27. > :11:32.lower growth. So nobody has sorted out how to get over that. Most but
:11:32. > :11:42.double parties - that most political parties have decided it
:11:42. > :11:43.
:11:43. > :11:47.is better to be on the side of austerity than have to start paying
:11:47. > :11:52.Spanish pride rates on your debt. Whether that was right will be
:11:52. > :11:57.debated for many years to come, because there is no definitive
:11:57. > :12:03.answer to it. The big question for politicians is, do you have an
:12:04. > :12:09.extra fiscal stimulus, or do you find other policies? The survey of
:12:09. > :12:14.economists by the FT found that most economists thought the rate of
:12:14. > :12:24.deficit reduction and the minute was probably right. I am not saying
:12:24. > :12:29.it is or it isn't, but they have a Susan Nichol, from your business
:12:29. > :12:31.perspective, what would she hoped to see the UK Government do to try
:12:31. > :12:37.and first of all stop the UK falling into recession, but
:12:37. > :12:41.stimulate growth? There are a couple of things they can do. There
:12:41. > :12:48.are squeezes at both ends for retailers, increasing taxes such as
:12:48. > :12:53.VAT has an impact, but also increasing taxes on raids, there is
:12:53. > :12:57.a new tax coming in and that is another a hundred and �28,000 that
:12:57. > :13:03.we have to pay this year. I am not sure they understand the impact and
:13:03. > :13:10.the other pressures involved in retail. That seems to suggest even
:13:10. > :13:14.boys that David Cameron is on to something. Seas in a scene that the
:13:14. > :13:20.red tape attached to business is hampering us and that is the point
:13:20. > :13:25.that coalition government is making? I hear that relentlessly. I
:13:25. > :13:32.try to turn to the evidence. The UK is the second most deregulated
:13:32. > :13:37.labour market and has the third most deregulated product market. We
:13:37. > :13:43.hear this relentlessly and we see no evidence produced and we have
:13:43. > :13:51.seen in the Coalition government embarked on it initiatives, but no
:13:51. > :13:57.practical policy outcomes at all. The UK economy is restrained in a
:13:57. > :14:03.way... And like to come back to something John said about the
:14:03. > :14:09.market's. When I see the markets rewarding economies is economies
:14:10. > :14:13.like the UK, where these still control the printing presses. It
:14:13. > :14:17.isn't rewarding austerity, it is rewarding countries that still
:14:17. > :14:22.control the public finances. Scottish government has reacted to
:14:22. > :14:27.these figures, saying that we should not be too negative. They
:14:27. > :14:33.pointed to the manufacturing exports are up to 0.2%. That is at
:14:33. > :14:38.least some good news? I have never paid much attention to that index.
:14:38. > :14:44.I do not understand how it affects things on a bigger picture. It is
:14:44. > :14:51.going in the right direction? Marginally. It was driven by drink.
:14:51. > :14:58.Manufacturing is a very small part of the economy. Obviously, there
:14:58. > :15:03.have been calls for a Budget for jobs and this is important. Where
:15:03. > :15:11.is the demand going to come from and what to do in the meantime?
:15:11. > :15:14.What is the best use of limited funds to do that? They will be a
:15:14. > :15:21.lot of public sector jobs cut in the next few years and the transfer
:15:21. > :15:26.of those jobs into either a private sector jobs or self-employment,
:15:26. > :15:32.doing training that could make that changeover easier, companies have
:15:32. > :15:36.got a lot of cash themselves that they could possibly invest if they
:15:36. > :15:42.were given incentives. Again, there are areas there are there would not
:15:42. > :15:46.involve a lot of money, but could improve matters. Susan Nichol, you
:15:46. > :15:54.manage shopping centres in the rest of the UK as well. Would experience
:15:54. > :15:57.a getting from different markets? Germany is far more buoyant. In
:15:57. > :16:04.Spain. It is an indication every where, if you have a strong
:16:04. > :16:08.proposition, it will be OK. If there are any chinks in Your arm or,
:16:08. > :16:15.and that is what we are seeing it through the recession, Peacock's
:16:15. > :16:22.went down today and that was a healthy company. It is a prolonged
:16:22. > :16:29.recession that is harming things. We are coping very well. For the UK,
:16:29. > :16:33.we have to look at what it will look like. We are faring badly now.
:16:33. > :16:37.Some town centres and high streets and some city centres, some will be
:16:37. > :16:43.devastated by what is happening with retail. We have to look to the
:16:43. > :16:50.future and see how we can improve the effects now. Steve and Boyd, we
:16:50. > :16:57.heard about the impact in Germany, eat, you have said Scotland should
:16:57. > :17:06.act like Germany. I think it is important to recognise that Germany
:17:06. > :17:16.is benefiting from the part of the Euro. If the Euro was to collapse...
:17:16. > :17:17.
:17:17. > :17:21.I don't believe we would. The whole economy is built for the long term,,
:17:21. > :17:24.it is all aimed at long-term investment, to look at co-
:17:24. > :17:32.determination and the relationship between the private sector and
:17:32. > :17:37.regional development banks. Thank you very much. Let us take a look
:17:37. > :17:41.at the front pages, beginning with the Financial Times. RBS Test
:17:41. > :17:46.Cameron stopped paper crackdown. That is about that bank bonuses.
:17:47. > :17:56.The Coalition have hoped they would need to excessive. The The Scottish
:17:56. > :18:00.Daily Mail calls... And the The Guardian calls for NHS plans to vet
:18:01. > :18:10.hospitals. Sir Tom Hunter is writing in the The Telegraph Duggan
:18:11. > :18:16.
:18:16. > :18:19.Good evening. Outbreaks of rain. Wet weather in the morning for it.
:18:19. > :18:24.Further north, some sunshine and a scattering of showers, becoming
:18:24. > :18:28.more frequent in the second half of the day. It could turn a bit wintry
:18:28. > :18:33.on the tops of the fells, gusty winds attached to them and still
:18:33. > :18:36.some dry and bright weather. For the Midlands and East Anglia, after
:18:36. > :18:41.the cloudy and wet start, by the afternoon most will be dry and
:18:41. > :18:44.there will be some sunny spells. Still fairly gusty winds coming
:18:44. > :18:49.from the north to north-westerly direction. It will bring in a
:18:49. > :18:52.colder air. It will not Phyllis mild as the morning. A few showers
:18:53. > :18:55.in North and West Wales and we will begin to see showers in Northern
:18:55. > :19:00.Ireland and some brightness in between. A little bow wintry on the
:19:00. > :19:05.tops of the hills. More significant amounts of snow for Scotland,
:19:05. > :19:10.particularly on the higher ground. Good covering in places. Still some
:19:10. > :19:14.gaps in the showers. Continue into Thursday night and on Friday in
:19:14. > :19:18.northern towns and cities, cloud will push then and temperatures
:19:18. > :19:22.will rise. They will be some rain. In central and southern parts of
:19:22. > :19:25.England and Wales, no real hint huge change in temperature. The