18/01/2012 Newsnight Scotland

Tonight on Newsnight Scotland: Unemployment is up, sales are down

and growth is sluggish. So how do we kick-start our sluggish economy?

Can Plan A, Plan B or Plan MacB save us now?

Good evening. The best you can say about today's economic statistics

is that we are not actually in recession yet. The politicians at

Westminster and Holyrood have insisted that their way is the only

way to manage the economy. Have they both failed, or should we be

grateful that the country is keeping its head above water as the

crisis in the euro rages on? Unlike much of the Eurozone, we are

not in recession. But apart from that, there is not much to cheer

about. The Scottish economy has grown by 0.5%, matching the rest of

the UK, but the outlook remains difficult. In Scotland,

unemployment is at 231,000, up by 90,000, amounting to 8.6%.

Christmas is the most important time of the year for the retail

sector, but according to the Scottish Retail Consortium,

December was the worst since 1999. You would expect sales to be on in

January. But the sales have now been on since the end of November

in some cases. On a street like this in Glasgow, there are Sale

signs on both sides. A building he has been unoccupied for months.

Overall, big cities and large shopping centres seem to have coped.

But here in Paisley, despite the best efforts of the local council,

things are not so good. Take this fake shop front for a toy shop.

They want to give the impression that things are happening. They are

not the only ones. Five closed shops in a row. It makes you feel

dejected. Depressed. It is meant to be one of the proudest towns in

Scotland. All the bigger stores have taken everything away. It is a

shame, because it used to be such a nice shopping area. So there is a

real gap which has opened up between large cities and the

smaller towns which surround them. The impact on local high streets is

worrying Scotland's business community. The retail offering in

Glasgow and Edinburgh is very strong. We want to ensure that that

continues, obviously. They are competing not just at UK level, but

internationally. The question is how we maintain viability of town

centres across the country. Retail may be part of that solution, but

it is not the whole solution. the council is not taking things

lying down. They have ambitions for the future, with the second phase

of various developments alongside the existing shopping centre and

the pedestrianisation. But if you build its, will they come? 2012

will be difficult. We know that coming out of a recession rooted in

high levels of debt, we will gets low levels of growth. That is the

best we can hope for. If things go badly with the Eurozone, we could

be dragged into recession. So there is grim news on the jobs front, on

the retail sector and consumer confidence. The only hopeful sign

is that we have not slipped into a double dip recession. We are

hanging on by 0.5%. I am joined now by the economist

John McLaren from the Centre for Public Policy for Regions at

Glasgow University, by the general manager of the St Enoch's shopping

centre in Glasgow, Susan Nicol, and assistant secretary of the STUC,

Stephen Boyd. John McLaren, let's begin with you. The biggest

question from that report was, are we heading back into recession?

are looking at low growth of about 1% this year for Scotland.

Prospects are similar to those of the UK, under 1% growth. Thereafter,

most forecasters are projected to rise. But that is just because

forecasters do that. They go back to the norm of two to be learned or

3%. But something will have to change. Either consumers will have

to become more confident or investment will have to improve.

you look at the blizzard of statistics we have seen today, it

seems as if the economy fell off a cliff in 2008, and we are still at

the bottom of the cliff? No, we have come back a bit. We have come

back about half the distance. But unlike in previous recessions,

where you were confident of the dip and then the coming back up, with

this one, we are less certain. We have been flatlining for a while,

and that is forecast to continue for the next year. You can see

where a negative impact could come from, for example with the Eurozone,

which could take you into a second dip and prove even more problematic.

One of the political narratives of the last year has been to say that

Scotland was outperforming the rest of the UK. But it seems to have

gone into a more traditional position now? At there is very

little difference between the performance of Scotland and the UK

as a whole, certainly in terms of GDP. Slightly less of a downturn

for Scotland, but then slower growth coming out of the trough of

the recession. Employment has been different. Scotland did very badly

just after the recession, much worse than the UK, but then bounced

back. But now it has turned a bit again. But overall, Scotland's

labour market position is slightly worse than before it went into the

recession. Before the recession, we were doing better than the UK. Now

we are about the same. Susan, we heard from the Scottish Retail

Consortium saying that last month was the worst December they have

had since 1999. Was that your experience? No, actually, but then

we have invested millions of pounds, so we expect some up to and from

that. We were 8% a bin fought for on the month. -- our football was

8% up. Retailers went into sale season very early, and the upturn

of that has been a much slower market in January. I think retail

will never be what it has been before. It has to move on. The

impact of the internet and the prolonged recession is changing

things. Do you think we will find out that demand in the high street

has been met by online sales? We do not have statistics for the last

few weeks yet. I do think that internet sales have increased

rapidly. That is not going to change. We will just have to accept

that. Retail will have to change. What about confidence about those

coming into your shopping centre? How confident are they? They are

chasing bargains. Confidence, it is hard to make them part with cash.

It is tough. Confidence is low. Stephen Boyd, in terms of

employment, this is a big issue for the STUC. Over the last year, the

UK government have stuck to their cuts programme and the Scottish

government have said we should have a Plan MacB. Given these latest

statistics, do you think Plan A or Plan MacB have had any success?

Plan A has had no success, certainly. The markets were not

demanding cuts. The UK economy was supply-side constrained, and the

Government were preventing companies from investing. The

assumption was that if you cut public spending, the private sector

would fill that gap. It was never going to happen. Could the state

fill that gap? They could spend and borrow more, but would it make up

for the collapse in consumer confidence? That is an important

point. It is not just public spending that has been cut. We are

also seeing wages falling. We have seen real household income at its

lowest level for modern times. There is reduced confidence in the

economy and we have seen the impact of consumer confidence on spending.

More has to happen, certainly. But it is difficult to see how we can

get out of this without the UK government filling the gap they

have created. Alex Salmond talks about spending money on

infrastructure. Is that what you mean? Absolutely. One of the great

ironies of the recession is that we are told the markets were demanding

these public spending cuts. We are told this by those whose ideology

tells us we should be looking at prices that the market sets. If you

look at the prices the market sets on UK government debt, the market

is screaming for the Government to bring forward spending and boost

the long-term productive capacity of the economy. They have to be

spending out to create jobs. John McLaren, do we have an example of a

country where they are still spending and they have managed to

mitigate against the worst effects of a recession? If you look at the

US, where they have kept their stimulus up, there are some poor

economic statistics coming out. There was some stimulus there, and

it was huge. But because they do not have many automatic stabilisers,

the scale of it was similar to the UK's. But we still have this

austerity versus growth conundrum which is at the centre of what most

countries are doing. The markets and politicians are searching for

good growth prospects, but they are also seeking an sometimes rewarding

tough austerity measures. But those measures are likely to lead to

lower growth. So nobody has sorted out how to get over that. Most but

double parties - that most political parties have decided it

is better to be on the side of austerity than have to start paying

Spanish pride rates on your debt. Whether that was right will be

debated for many years to come, because there is no definitive

answer to it. The big question for politicians is, do you have an

extra fiscal stimulus, or do you find other policies? The survey of

economists by the FT found that most economists thought the rate of

deficit reduction and the minute was probably right. I am not saying

it is or it isn't, but they have a Susan Nichol, from your business

perspective, what would she hoped to see the UK Government do to try

and first of all stop the UK falling into recession, but

stimulate growth? There are a couple of things they can do. There

are squeezes at both ends for retailers, increasing taxes such as

VAT has an impact, but also increasing taxes on raids, there is

a new tax coming in and that is another a hundred and �28,000 that

we have to pay this year. I am not sure they understand the impact and

the other pressures involved in retail. That seems to suggest even

boys that David Cameron is on to something. Seas in a scene that the

red tape attached to business is hampering us and that is the point

that coalition government is making? I hear that relentlessly. I

try to turn to the evidence. The UK is the second most deregulated

labour market and has the third most deregulated product market. We

hear this relentlessly and we see no evidence produced and we have

seen in the Coalition government embarked on it initiatives, but no

practical policy outcomes at all. The UK economy is restrained in a

way... And like to come back to something John said about the

market's. When I see the markets rewarding economies is economies

like the UK, where these still control the printing presses. It

isn't rewarding austerity, it is rewarding countries that still

control the public finances. Scottish government has reacted to

these figures, saying that we should not be too negative. They

pointed to the manufacturing exports are up to 0.2%. That is at

least some good news? I have never paid much attention to that index.

I do not understand how it affects things on a bigger picture. It is

going in the right direction? Marginally. It was driven by drink.

Manufacturing is a very small part of the economy. Obviously, there

have been calls for a Budget for jobs and this is important. Where

is the demand going to come from and what to do in the meantime?

What is the best use of limited funds to do that? They will be a

lot of public sector jobs cut in the next few years and the transfer

of those jobs into either a private sector jobs or self-employment,

doing training that could make that changeover easier, companies have

got a lot of cash themselves that they could possibly invest if they

were given incentives. Again, there are areas there are there would not

involve a lot of money, but could improve matters. Susan Nichol, you

manage shopping centres in the rest of the UK as well. Would experience

a getting from different markets? Germany is far more buoyant. In

Spain. It is an indication every where, if you have a strong

proposition, it will be OK. If there are any chinks in Your arm or,

and that is what we are seeing it through the recession, Peacock's

went down today and that was a healthy company. It is a prolonged

recession that is harming things. We are coping very well. For the UK,

we have to look at what it will look like. We are faring badly now.

Some town centres and high streets and some city centres, some will be

devastated by what is happening with retail. We have to look to the

future and see how we can improve the effects now. Steve and Boyd, we

heard about the impact in Germany, eat, you have said Scotland should

act like Germany. I think it is important to recognise that Germany

is benefiting from the part of the Euro. If the Euro was to collapse...

I don't believe we would. The whole economy is built for the long term,,

it is all aimed at long-term investment, to look at co-

determination and the relationship between the private sector and

regional development banks. Thank you very much. Let us take a look

at the front pages, beginning with the Financial Times. RBS Test

Cameron stopped paper crackdown. That is about that bank bonuses.

The Coalition have hoped they would need to excessive. The The Scottish

Daily Mail calls... And the The Guardian calls for NHS plans to vet

hospitals. Sir Tom Hunter is writing in the The Telegraph Duggan

Good evening. Outbreaks of rain. Wet weather in the morning for it.

Further north, some sunshine and a scattering of showers, becoming

more frequent in the second half of the day. It could turn a bit wintry

on the tops of the fells, gusty winds attached to them and still

some dry and bright weather. For the Midlands and East Anglia, after

the cloudy and wet start, by the afternoon most will be dry and

there will be some sunny spells. Still fairly gusty winds coming

from the north to north-westerly direction. It will bring in a

colder air. It will not Phyllis mild as the morning. A few showers

in North and West Wales and we will begin to see showers in Northern

Ireland and some brightness in between. A little bow wintry on the

tops of the hills. More significant amounts of snow for Scotland,

particularly on the higher ground. Good covering in places. Still some

gaps in the showers. Continue into Thursday night and on Friday in

northern towns and cities, cloud will push then and temperatures

will rise. They will be some rain. In central and southern parts of

England and Wales, no real hint huge change in temperature. The