:00:00. > :00:00.social workers. Their supporters argue that they save money in the
:00:00. > :00:17.long run because fewer offenders and up in prison. -- end.
:00:18. > :00:23.Tonight, times are heaving -- towns are heaving with Christmas shoppers.
:00:24. > :00:37.We will discuss the state of the economy as 2013 draws to a close.
:00:38. > :00:40.Good evening. The sales are already in many stores. Even if the recovery
:00:41. > :00:44.has started, it is not quite business as usual. In a moment, we
:00:45. > :00:59.will take the temperature of the economy at the end of 2013.
:01:00. > :01:07.It is the season to eat, drink and be merry and... Shop. Since the
:01:08. > :01:11.downturn, retailers have suffered with many big names like Woolworths
:01:12. > :01:15.going to the wall. The traditional Boxing Day sales are now a misnomer,
:01:16. > :01:21.often starting at the beginning of December. Figures out today show the
:01:22. > :01:26.number of shoppers went up last month. Although 0.3% lower than this
:01:27. > :01:31.time last year, November's figures are higher improvement from the 2.7
:01:32. > :01:35.said the client in October. That is better than the rest of the UK in
:01:36. > :01:41.the hole where shopper numbers were down nearly 3%. The consortium are
:01:42. > :01:46.cautiously optimistic. 2013 has been a relatively good year for retail in
:01:47. > :01:51.terms of the wider picture of the economy. 2012 was very tough. Sales
:01:52. > :02:01.growth for fine for most of the year. But we are in the positive
:02:02. > :02:05.figures. Stallholders here near Glasgow should be happy, the centre
:02:06. > :02:09.is reporting a 6% rise in football over the past year. If that
:02:10. > :02:16.translating into sales? Not necessarily always. In the most, it
:02:17. > :02:20.does. Generally, if you have customers coming into the shopping
:02:21. > :02:25.centre, sales would increase. However, at this time of year, a lot
:02:26. > :02:30.of savvy customers and most Glaswegians are savvy retail wise,
:02:31. > :02:36.they scan them all, they scanned the officers and they register a price
:02:37. > :02:40.they feel is a fair price. We may be any better financial position than
:02:41. > :02:49.last year, but is it encouraging shoppers to spend more? Average.
:02:50. > :02:53.About the same. Probably a bit more, just because the kids are
:02:54. > :02:58.getting older and they want other things. We have probably spent more
:02:59. > :03:07.this year. Ways that? Because we have on small. I think it is the
:03:08. > :03:12.same. The real game changer has been Internet shopping. Those sales are
:03:13. > :03:16.still growing. This is also changing things. Mobile shopping. Add to that
:03:17. > :03:20.the voucher and discount code website and you will see that
:03:21. > :03:26.retailers are getting increasingly sophisticated in their ways to get
:03:27. > :03:29.our money. We are in a voucher code mentality at the moment. Part of
:03:30. > :03:34.that is the structural change, the ability to compare prices and part
:03:35. > :03:37.of it is because of the recession. The issue around vouchers is that
:03:38. > :03:42.that is to get people into the stores and onto the website.
:03:43. > :03:44.Retailers are really looking for things to kick-start their retail
:03:45. > :03:54.sales. A few weeks ago, we had Black things to kick-start their retail
:03:55. > :03:58.Friday, that was about and events to try and get and encourage people to
:03:59. > :04:02.get them into the stores and onto the websites. He urges caution over
:04:03. > :04:09.how reliable footfall figures can be. It is always interesting, it is
:04:10. > :04:13.a snapshot. The interesting thing is how it translates into sales for
:04:14. > :04:17.retailers as that is key. But also how it is very over a longer period
:04:18. > :04:23.of time. A snapshot on a particular day does not tell as a lot because
:04:24. > :04:27.of things like whether. The figures at the minute seemed to suggest
:04:28. > :04:31.people are getting out, whether that is translating into sales, we do not
:04:32. > :04:37.know. What does this say about the pound in our pocket? The economy is
:04:38. > :04:42.still tough. People are still watching them money, still feeling a
:04:43. > :04:46.bit cash conscious. They are holding the spending back a bit, but we
:04:47. > :04:55.suspect it will be higher this year than last. The truth is, until
:04:56. > :05:02.January, when sales figures are published, retailers want to know if
:05:03. > :05:07.it has been a cool Yule or not? Is spending more money and indicator we
:05:08. > :05:14.are seeing good times, or are we willing to get into more depth to
:05:15. > :05:23.have a nice Christmas? -- into debt. I'm joined by Colin from the
:05:24. > :05:29.Federation of Small Businesses. Good evening.
:05:30. > :05:34.Joe, Christmas and the spending spree surrounding it, is it giving
:05:35. > :05:38.us a false idea of the economy? I don't think so. I think we are
:05:39. > :05:45.seeing growth coming through. The Autumn Statement by the Chancellor
:05:46. > :05:49.indicated that not only will be seen growth, but faster growth than we
:05:50. > :05:58.were predicting. It is not the growth we may and have expected.
:05:59. > :06:05.Does it feel to you that the recovery is under way? We are in a
:06:06. > :06:08.better place. Indeed, if you look at us in a year on year confidence
:06:09. > :06:13.figures, we have seen in years and... Three years of increases. We
:06:14. > :06:17.are also seen turnover up for the first time in a long time in a
:06:18. > :06:24.long-time probability is up. Confidence in members is up? It is.
:06:25. > :06:28.We are seeing investment firming up and that is feeding through to
:06:29. > :06:32.hiring intentions, too. While we're not out of the woods, we cannot get
:06:33. > :06:37.carried away, it does look like we could be putting down the fairly
:06:38. > :06:42.solid foundations for a sustainable recovery. There seems to be a trend,
:06:43. > :06:48.all the indicators seem to point to a recovery. Is that how you see it,
:06:49. > :06:53.Stephen? it is under way. As my colleagues have mentioned, we are in
:06:54. > :06:56.a better place than we were. What is interesting to me and what is
:06:57. > :07:04.fuelling this spending growth that we are supposedly beginning to see,
:07:05. > :07:12.it is not wages as we have seen them fall, we are seeing additional
:07:13. > :07:14.spending, I would not exaggerate the extent of that. This is not
:07:15. > :07:21.sustainable. I think the real extent of that. This is not
:07:22. > :07:24.concern is that we have seen none of the rebound is that we have been
:07:25. > :07:27.promised and if we look at the competition, it gives us a lot of
:07:28. > :07:31.reason to worry for the longer term. When we talk about recovery, would
:07:32. > :07:34.you suggest the kind of recovery in a column of reason to worry for the
:07:35. > :07:40.longer term. When we talk about recovery, would you suggest the kind
:07:41. > :07:44.of recovery and Colin Borland's? Many people that you would speak to
:07:45. > :07:55.would wonder what this recovery is all about. They are not seen that
:07:56. > :07:58.feeding through into living standards. Four out of five of the
:07:59. > :08:04.new jobs being created are in sectors where the pain tends to be
:08:05. > :08:07.below the living wage. I think we are a long way away from the
:08:08. > :08:11.recovery reaching a stage where people will feel more prosperous.
:08:12. > :08:17.Interestingly, people seem to be spending more. The indications are
:08:18. > :08:20.there. If you get the information coming through, savings are being
:08:21. > :08:26.reduced. But suppose that is not to be unexpected considering what you
:08:27. > :08:30.get from those who do have savings, what do you get from interest rates?
:08:31. > :08:35.They don't spend it, you are losing the real value of the income. For
:08:36. > :08:39.those who do have savings, they are reducing them to allow them to
:08:40. > :08:45.continue to spend. We do want to see every balancing... To see exports
:08:46. > :08:49.increasing, to see business investment stepping into the place
:08:50. > :08:55.where public sector spending is reducing and continuing to expect to
:08:56. > :08:58.reduce. We have two assumed that if businesses see growth coming
:08:59. > :09:03.through, in confidence from their perspective is cemented, they will
:09:04. > :09:12.start to... I will start to fill the gap. It has been a tough time for
:09:13. > :09:16.retailers. What was interesting there in that report was the
:09:17. > :09:19.changing nature of people's shopping habits. Other retailers are seen
:09:20. > :09:23.increased footfall, things may still be difficult for many of them in the
:09:24. > :09:29.New Year because of the way people are shopping. We have to be clear
:09:30. > :09:33.that retail is not synonymous with the economy. It is a good
:09:34. > :09:37.bellwether. Particularly at this time of year. But there's no
:09:38. > :09:42.question that the way we shop and the way we live our lives has
:09:43. > :09:47.changed dramatically since many of our High Streets were created. Most
:09:48. > :09:51.of our town centres were created, we didn't have fridges, cars, two
:09:52. > :09:57.partners outworking. The future of that local economy does not rely on
:09:58. > :10:07.turn the clocks back. It need adapting. Need to make sure it fits
:10:08. > :10:14.in with our busy lives. It will need more than consumer spending. To have
:10:15. > :10:19.significant economic growth and sustained, we need to see increased
:10:20. > :10:24.corporate sector spending Principe to help fill the gap that the public
:10:25. > :10:29.sector will be creating. Also to improve productivity and to create
:10:30. > :10:34.the private sector jobs that are having to be required to take up the
:10:35. > :10:37.slack in public sector reductions. It is interesting. There was a
:10:38. > :10:41.report last month on the jobs for October that said that the Scottish
:10:42. > :10:46.jobs market was going to be back at prerecession levels. Is it going to
:10:47. > :10:51.be a different looking economy this time around? We are not close to
:10:52. > :11:01.achieving prerecession levels of employment, the employment rate is
:11:02. > :11:06.4%, it in place of hundred thousand jobs needed to take it back to where
:11:07. > :11:14.it was in 2008. It is stagnating. It has stayed constant. They were up in
:11:15. > :11:18.the last figures. Very slightly, but if you look at a longer period,
:11:19. > :11:24.stagnating, basically. We are beginning to see the collapse in
:11:25. > :11:33.full-time employment and it begins to turn around and see a rise in
:11:34. > :11:37.part-time employment. Nearly 250,000 people are underemployed. The demand
:11:38. > :11:42.for labour remains low. They should not exaggerate the improvements we
:11:43. > :11:46.have seen. But the underemployment, if that's not a necessity of people
:11:47. > :11:49.saying as the recession started, the employers would not pay people off,
:11:50. > :11:55.they would try and keep as many as they could on the books. I think
:11:56. > :11:58.that it's a fair point. The small businesses, you know you workers
:11:59. > :12:05.are, you know what the kids want for Christmas. It tried very hard to
:12:06. > :12:11.keep employment numbers up. It is important that when things start to
:12:12. > :12:16.get better and growth comes back, that we begin to make sure that we
:12:17. > :12:23.are employing our existing staff as greatly as we can. What we saw about
:12:24. > :12:28.three or four months ago was that businesses who had maybe, onto
:12:29. > :12:32.short-term workers and went working at full capacity have now began to
:12:33. > :12:36.sort of top up and operating at capacity and thinking again about
:12:37. > :12:43.hiring. I take his point that we do not want... Part-time working can
:12:44. > :12:46.suit employees and employees, but at the same time, if you have the
:12:47. > :12:52.opportunity to get a full-time job, a lot of members will do it and
:12:53. > :12:55.directly employed them rather than using other methods. UK Government
:12:56. > :13:02.talks about every balancing of the economy. David Cameron talks about
:13:03. > :13:06.that he believes 1 million new jobs have been created in the private
:13:07. > :13:16.sector UK wide, he believes that deals with some of the redundancies
:13:17. > :13:19.that we have seen. We have to be clear about the extent of
:13:20. > :13:23.rebalancing. We have seen figures fall below prerecession levels, and
:13:24. > :13:26.we've seen net trade make a negative contribution to growth. Last week,
:13:27. > :13:29.it was reported that there was no significant rebalancing over the
:13:30. > :13:35.next five years will stop they say by 2018, will not see any inroads
:13:36. > :13:38.into the lost output with experience in the last six years, so I think
:13:39. > :13:43.the need to be really clear that we have seen no rebalancing. We have
:13:44. > :13:50.seen policy looks designed to retake is back to a rebalanced economy, but
:13:51. > :13:54.there has been no progress. That's quite interesting, because I think
:13:55. > :13:55.what we're beginning to see from the figures is that investment
:13:56. > :14:04.intentions have been frankly all over the place. Last summer, they
:14:05. > :14:08.fell off a cliff. That was concerning. They have come back, but
:14:09. > :14:11.fallen away, and now they seem to be building again. I think this time,
:14:12. > :14:16.for a number of reasons, this could be the real deal. It is partly to do
:14:17. > :14:21.with changes around capital allowances, partly because for those
:14:22. > :14:25.who can get it, it is now affordable. Also, if you have had
:14:26. > :14:28.the hatches battens down for the past five years, things are
:14:29. > :14:32.effectively wearing out, and you have to go and replace them. You
:14:33. > :14:36.think, I have got this far, now is the time to invest, so I think
:14:37. > :14:40.looking forward, we can afford to be a little bit confident. Taking on
:14:41. > :14:42.board what Stephen says about realignment and him not being
:14:43. > :14:46.convinced, there are others out there who believe that we are coming
:14:47. > :14:49.back to the prerecession peak. Not just the bank of Scotland
:14:50. > :14:56.report, but the Chambers of commerce saying the UK will surpasses
:14:57. > :15:00.prerecession peak next year. Looking forward to 2017, how different will
:15:01. > :15:04.be economy in Scotland and UK wide be to 2007? We will have lost a
:15:05. > :15:10.proportion of the economy that isn't coming back. We still don't know
:15:11. > :15:12.what the financial services and banking sector will look like, and
:15:13. > :15:17.it is a long way from being sorted, so we have lost that part of the
:15:18. > :15:21.economy. That will not come back. But we have to seek substantial
:15:22. > :15:26.increases in productivity. We have had a productivity collapse in this
:15:27. > :15:28.recession, and if we are going to remain competitive internationally,
:15:29. > :15:30.we are going to have to see significant improvement in
:15:31. > :15:35.productivity that has to come from business investment and different
:15:36. > :15:40.business practices. To some extent, we will see if we are competitive
:15:41. > :15:43.and if we have sustainable growth, we will be that much more
:15:44. > :15:46.productive, we'll have a higher skilled labour force, but we have
:15:47. > :15:49.quite a bit to go between now and then, so we actually have to see
:15:50. > :15:55.investment in infrastructure and in skills to make that happen. How do
:15:56. > :15:59.you compare the Scottish situation to the UK wide situation, because
:16:00. > :16:02.obviously, the economy in the south-east of England, for
:16:03. > :16:06.instance, is very different to that of Scotland? I think if you look
:16:07. > :16:09.across the nations and regions of the UK, Scotland is performing
:16:10. > :16:12.relatively well. London and the south-east in the East of England
:16:13. > :16:16.have surged ahead, as you would expect, but Scotland compared to
:16:17. > :16:23.other regions is performing well, both in terms of employment and GDA
:16:24. > :16:28.growth. It is difficult to put your finger on why that is the case, and
:16:29. > :16:31.I think in terms of rebalancing, we've seen no significant
:16:32. > :16:35.rebalancing as a Scottish level, and it is certainly a UK wide problem.
:16:36. > :16:38.We've seen no signature consigned in Scotland that things have been any
:16:39. > :16:41.different. We've seen many companies go to the wall in this past five
:16:42. > :16:47.years, Woolworths being one of the biggest. But today, Blockbuster
:16:48. > :16:50.Video has closed for the final time as well. There are some who worry
:16:51. > :16:54.that in the New Year, some of the companies might go to. What has been
:16:55. > :16:59.the difference between those who have managed to sustain their
:17:00. > :17:02.position and those who haven't? I think those who have come out of
:17:03. > :17:05.this mess are the ones who perhaps remember previous recession that
:17:06. > :17:08.what happened then, and those who saw the way the wind was blowing.
:17:09. > :17:12.Some people have decided very quickly to diversify, get out of a
:17:13. > :17:17.particular market that wasn't doing well, and some have decided to cut a
:17:18. > :17:20.lot of extraneous activities in focus purely on what they are good
:17:21. > :17:22.at, get back to basics. It really has varied from business to
:17:23. > :17:29.business, but the one thing they'll have common is, she hard work and
:17:30. > :17:34.determination. How different has this downturn been to previous
:17:35. > :17:36.recessions? In the past, they've followed a pattern, but this one
:17:37. > :17:44.seems to be quite different, not just because of the sustain nature,
:17:45. > :17:48.but the way that some things behaved in terms of unemployment, etc. Yes,
:17:49. > :17:53.we don't get many financial crisis driven recessions, and this is one
:17:54. > :17:57.of those. It is by far the worst we have seen in this century, in the
:17:58. > :18:05.last 100 years. It is difficult to compare it with the others, because
:18:06. > :18:10.often, it is factors other than the financial services sector. If you
:18:11. > :18:16.haven't got the oil to turn the wheels of industry, which banking
:18:17. > :18:19.is, those who have got a wish to grow or invest are actually stopped
:18:20. > :18:22.from doing so, and that is the challenge we are facing at the
:18:23. > :18:24.moment. Until we have a banking sector that is working on and
:18:25. > :18:31.working in the adjusted business, we are going to continue to see this
:18:32. > :18:36.slow, anaemic type of growth, and it could take a long time before we get
:18:37. > :18:42.back to prerecession levels. What is your view on how different this has
:18:43. > :18:45.been to previous recessions? I endorse Joe's views almost entirely.
:18:46. > :18:51.By what I would like to point out is, I don't believe we have a
:18:52. > :18:56.banking sector that has worked in the interest of business in
:18:57. > :18:59.Scotland, particularly in terms of committed, long-term investment by
:19:00. > :19:02.companies really need to invest in people and to invest in capital
:19:03. > :19:05.equipment. The really unfortunate thing is, despite the nature of this
:19:06. > :19:11.recession, it was driven by a financial crisis, but we have seen
:19:12. > :19:15.no serious moves towards structural reform of that sector. Is the issue
:19:16. > :19:19.of the banks still when you hear from your members? Yes, it is still
:19:20. > :19:24.the case that availability of credit remains a bigger issue than cost, so
:19:25. > :19:29.schemes such as Funding For Lending are not going to address that, but
:19:30. > :19:32.the big thing is here, we let this tentative recovery slip through our
:19:33. > :19:37.fingers because ambitious firms who have got cats die and, really good
:19:38. > :19:41.solid propositions, cannot get the funding they need to make this a
:19:42. > :19:44.reality. Thank you bring much for coming in to talk to is this
:19:45. > :19:48.evening. And now, a quick look at the papers.
:19:49. > :19:53.In the Scotsman, Libya joins probe into Lockerbie bombing. Two
:19:54. > :19:58.prosecutors are now on the enquiry. The Daily Telegraph says that
:19:59. > :20:01.fortysomethings face a bleak future, and that story is on the front page
:20:02. > :20:04.of the Daily Mail as well. Apparently, those born in 1960s and
:20:05. > :20:10.70s will be poorer than their parents. That is all for me.
:20:11. > :20:11.I will be back on BBC Radio Scotland tomorrow at 6am. Gordon will be here
:20:12. > :20:27.tomorrow night. Good night. It will turn quite cold overnight at
:20:28. > :20:29.the rain fades away towards the southeastern corner. Patchy fog or
:20:30. > :20:38.form after the rain, particularly in Wales and Lions. Or many, a dry
:20:39. > :20:41.nights. Very few showers and Northern Ireland. The southerly wind
:20:42. > :20:44.will push them away. The wind strengthened in the North of
:20:45. > :20:51.Scotland by gale force the afternoon and there could be icy patches in
:20:52. > :20:54.the morning. Some sunshine, but a chilly day in northern England. The
:20:55. > :20:57.odd patch of fog lingering through the morning in the Vale of York will
:20:58. > :21:01.stop some sunshine through the Midlands, especially the East
:21:02. > :21:04.Midlands. Still an overhang of cloud in the south-east, rain coming back
:21:05. > :21:06.in again during the afternoon. Across the south-west of England,
:21:07. > :21:14.sunny spells lightly. Away from the south coast, early morning mist and
:21:15. > :21:17.fog, and fog patches in Wales as well. That will lift into low cloud.
:21:18. > :21:22.Some places could be grey all day. It could be a bit colder across
:21:23. > :21:26.England and Wales, with still a chilly feel for Scotland and
:21:27. > :21:27.Northern Ireland, despite the sunshine. Wednesday,