16/12/2013 Newsnight Scotland

social workers. Their supporters argue that they save money in the

long run because fewer offenders and up in prison. -- end.

Tonight, times are heaving -- towns are heaving with Christmas shoppers.

We will discuss the state of the economy as 2013 draws to a close.

Good evening. The sales are already in many stores. Even if the recovery

has started, it is not quite business as usual. In a moment, we

will take the temperature of the economy at the end of 2013.

It is the season to eat, drink and be merry and... Shop. Since the

downturn, retailers have suffered with many big names like Woolworths

going to the wall. The traditional Boxing Day sales are now a misnomer,

often starting at the beginning of December. Figures out today show the

number of shoppers went up last month. Although 0.3% lower than this

time last year, November's figures are higher improvement from the 2.7

said the client in October. That is better than the rest of the UK in

the hole where shopper numbers were down nearly 3%. The consortium are

cautiously optimistic. 2013 has been a relatively good year for retail in

terms of the wider picture of the economy. 2012 was very tough. Sales

growth for fine for most of the year. But we are in the positive

figures. Stallholders here near Glasgow should be happy, the centre

is reporting a 6% rise in football over the past year. If that

translating into sales? Not necessarily always. In the most, it

does. Generally, if you have customers coming into the shopping

centre, sales would increase. However, at this time of year, a lot

of savvy customers and most Glaswegians are savvy retail wise,

they scan them all, they scanned the officers and they register a price

they feel is a fair price. We may be any better financial position than

last year, but is it encouraging shoppers to spend more? Average.

About the same. Probably a bit more, just because the kids are

getting older and they want other things. We have probably spent more

this year. Ways that? Because we have on small. I think it is the

same. The real game changer has been Internet shopping. Those sales are

still growing. This is also changing things. Mobile shopping. Add to that

the voucher and discount code website and you will see that

retailers are getting increasingly sophisticated in their ways to get

our money. We are in a voucher code mentality at the moment. Part of

that is the structural change, the ability to compare prices and part

of it is because of the recession. The issue around vouchers is that

that is to get people into the stores and onto the website.

Retailers are really looking for things to kick-start their retail

sales. A few weeks ago, we had Black things to kick-start their retail

Friday, that was about and events to try and get and encourage people to

get them into the stores and onto the websites. He urges caution over

how reliable footfall figures can be. It is always interesting, it is

a snapshot. The interesting thing is how it translates into sales for

retailers as that is key. But also how it is very over a longer period

of time. A snapshot on a particular day does not tell as a lot because

of things like whether. The figures at the minute seemed to suggest

people are getting out, whether that is translating into sales, we do not

know. What does this say about the pound in our pocket? The economy is

still tough. People are still watching them money, still feeling a

bit cash conscious. They are holding the spending back a bit, but we

suspect it will be higher this year than last. The truth is, until

January, when sales figures are published, retailers want to know if

it has been a cool Yule or not? Is spending more money and indicator we

are seeing good times, or are we willing to get into more depth to

have a nice Christmas? -- into debt. I'm joined by Colin from the

Federation of Small Businesses. Good evening.

Joe, Christmas and the spending spree surrounding it, is it giving

us a false idea of the economy? I don't think so. I think we are

seeing growth coming through. The Autumn Statement by the Chancellor

indicated that not only will be seen growth, but faster growth than we

were predicting. It is not the growth we may and have expected.

Does it feel to you that the recovery is under way? We are in a

better place. Indeed, if you look at us in a year on year confidence

figures, we have seen in years and... Three years of increases. We

are also seen turnover up for the first time in a long time in a

long-time probability is up. Confidence in members is up? It is.

We are seeing investment firming up and that is feeding through to

hiring intentions, too. While we're not out of the woods, we cannot get

carried away, it does look like we could be putting down the fairly

solid foundations for a sustainable recovery. There seems to be a trend,

all the indicators seem to point to a recovery. Is that how you see it,

Stephen? it is under way. As my colleagues have mentioned, we are in

a better place than we were. What is interesting to me and what is

fuelling this spending growth that we are supposedly beginning to see,

it is not wages as we have seen them fall, we are seeing additional

spending, I would not exaggerate the extent of that. This is not

sustainable. I think the real extent of that. This is not

concern is that we have seen none of the rebound is that we have been

promised and if we look at the competition, it gives us a lot of

reason to worry for the longer term. When we talk about recovery, would

you suggest the kind of recovery in a column of reason to worry for the

longer term. When we talk about recovery, would you suggest the kind

of recovery and Colin Borland's? Many people that you would speak to

would wonder what this recovery is all about. They are not seen that

feeding through into living standards. Four out of five of the

new jobs being created are in sectors where the pain tends to be

below the living wage. I think we are a long way away from the

recovery reaching a stage where people will feel more prosperous.

Interestingly, people seem to be spending more. The indications are

there. If you get the information coming through, savings are being

reduced. But suppose that is not to be unexpected considering what you

get from those who do have savings, what do you get from interest rates?

They don't spend it, you are losing the real value of the income. For

those who do have savings, they are reducing them to allow them to

continue to spend. We do want to see every balancing... To see exports

increasing, to see business investment stepping into the place

where public sector spending is reducing and continuing to expect to

reduce. We have two assumed that if businesses see growth coming

through, in confidence from their perspective is cemented, they will

start to... I will start to fill the gap. It has been a tough time for

retailers. What was interesting there in that report was the

changing nature of people's shopping habits. Other retailers are seen

increased footfall, things may still be difficult for many of them in the

New Year because of the way people are shopping. We have to be clear

that retail is not synonymous with the economy. It is a good

bellwether. Particularly at this time of year. But there's no

question that the way we shop and the way we live our lives has

changed dramatically since many of our High Streets were created. Most

of our town centres were created, we didn't have fridges, cars, two

partners outworking. The future of that local economy does not rely on

turn the clocks back. It need adapting. Need to make sure it fits

in with our busy lives. It will need more than consumer spending. To have

significant economic growth and sustained, we need to see increased

corporate sector spending Principe to help fill the gap that the public

sector will be creating. Also to improve productivity and to create

the private sector jobs that are having to be required to take up the

slack in public sector reductions. It is interesting. There was a

report last month on the jobs for October that said that the Scottish

jobs market was going to be back at prerecession levels. Is it going to

be a different looking economy this time around? We are not close to

achieving prerecession levels of employment, the employment rate is

4%, it in place of hundred thousand jobs needed to take it back to where

it was in 2008. It is stagnating. It has stayed constant. They were up in

the last figures. Very slightly, but if you look at a longer period,

stagnating, basically. We are beginning to see the collapse in

full-time employment and it begins to turn around and see a rise in

part-time employment. Nearly 250,000 people are underemployed. The demand

for labour remains low. They should not exaggerate the improvements we

have seen. But the underemployment, if that's not a necessity of people

saying as the recession started, the employers would not pay people off,

they would try and keep as many as they could on the books. I think

that it's a fair point. The small businesses, you know you workers

are, you know what the kids want for Christmas. It tried very hard to

keep employment numbers up. It is important that when things start to

get better and growth comes back, that we begin to make sure that we

are employing our existing staff as greatly as we can. What we saw about

three or four months ago was that businesses who had maybe, onto

short-term workers and went working at full capacity have now began to

sort of top up and operating at capacity and thinking again about

hiring. I take his point that we do not want... Part-time working can

suit employees and employees, but at the same time, if you have the

opportunity to get a full-time job, a lot of members will do it and

directly employed them rather than using other methods. UK Government

talks about every balancing of the economy. David Cameron talks about

that he believes 1 million new jobs have been created in the private

sector UK wide, he believes that deals with some of the redundancies

that we have seen. We have to be clear about the extent of

rebalancing. We have seen figures fall below prerecession levels, and

we've seen net trade make a negative contribution to growth. Last week,

it was reported that there was no significant rebalancing over the

next five years will stop they say by 2018, will not see any inroads

into the lost output with experience in the last six years, so I think

the need to be really clear that we have seen no rebalancing. We have

seen policy looks designed to retake is back to a rebalanced economy, but

there has been no progress. That's quite interesting, because I think

what we're beginning to see from the figures is that investment

intentions have been frankly all over the place. Last summer, they

fell off a cliff. That was concerning. They have come back, but

fallen away, and now they seem to be building again. I think this time,

for a number of reasons, this could be the real deal. It is partly to do

with changes around capital allowances, partly because for those

who can get it, it is now affordable. Also, if you have had

the hatches battens down for the past five years, things are

effectively wearing out, and you have to go and replace them. You

think, I have got this far, now is the time to invest, so I think

looking forward, we can afford to be a little bit confident. Taking on

board what Stephen says about realignment and him not being

convinced, there are others out there who believe that we are coming

back to the prerecession peak. Not just the bank of Scotland

report, but the Chambers of commerce saying the UK will surpasses

prerecession peak next year. Looking forward to 2017, how different will

be economy in Scotland and UK wide be to 2007? We will have lost a

proportion of the economy that isn't coming back. We still don't know

what the financial services and banking sector will look like, and

it is a long way from being sorted, so we have lost that part of the

economy. That will not come back. But we have to seek substantial

increases in productivity. We have had a productivity collapse in this

recession, and if we are going to remain competitive internationally,

we are going to have to see significant improvement in

productivity that has to come from business investment and different

business practices. To some extent, we will see if we are competitive

and if we have sustainable growth, we will be that much more

productive, we'll have a higher skilled labour force, but we have

quite a bit to go between now and then, so we actually have to see

investment in infrastructure and in skills to make that happen. How do

you compare the Scottish situation to the UK wide situation, because

obviously, the economy in the south-east of England, for

instance, is very different to that of Scotland? I think if you look

across the nations and regions of the UK, Scotland is performing

relatively well. London and the south-east in the East of England

have surged ahead, as you would expect, but Scotland compared to

other regions is performing well, both in terms of employment and GDA

growth. It is difficult to put your finger on why that is the case, and

I think in terms of rebalancing, we've seen no significant

rebalancing as a Scottish level, and it is certainly a UK wide problem.

We've seen no signature consigned in Scotland that things have been any

different. We've seen many companies go to the wall in this past five

years, Woolworths being one of the biggest. But today, Blockbuster

Video has closed for the final time as well. There are some who worry

that in the New Year, some of the companies might go to. What has been

the difference between those who have managed to sustain their

position and those who haven't? I think those who have come out of

this mess are the ones who perhaps remember previous recession that

what happened then, and those who saw the way the wind was blowing.

Some people have decided very quickly to diversify, get out of a

particular market that wasn't doing well, and some have decided to cut a

lot of extraneous activities in focus purely on what they are good

at, get back to basics. It really has varied from business to

business, but the one thing they'll have common is, she hard work and

determination. How different has this downturn been to previous

recessions? In the past, they've followed a pattern, but this one

seems to be quite different, not just because of the sustain nature,

but the way that some things behaved in terms of unemployment, etc. Yes,

we don't get many financial crisis driven recessions, and this is one

of those. It is by far the worst we have seen in this century, in the

last 100 years. It is difficult to compare it with the others, because

often, it is factors other than the financial services sector. If you

haven't got the oil to turn the wheels of industry, which banking

is, those who have got a wish to grow or invest are actually stopped

from doing so, and that is the challenge we are facing at the

moment. Until we have a banking sector that is working on and

working in the adjusted business, we are going to continue to see this

slow, anaemic type of growth, and it could take a long time before we get

back to prerecession levels. What is your view on how different this has

been to previous recessions? I endorse Joe's views almost entirely.

By what I would like to point out is, I don't believe we have a

banking sector that has worked in the interest of business in

Scotland, particularly in terms of committed, long-term investment by

companies really need to invest in people and to invest in capital

equipment. The really unfortunate thing is, despite the nature of this

recession, it was driven by a financial crisis, but we have seen

no serious moves towards structural reform of that sector. Is the issue

of the banks still when you hear from your members? Yes, it is still

the case that availability of credit remains a bigger issue than cost, so

schemes such as Funding For Lending are not going to address that, but

the big thing is here, we let this tentative recovery slip through our

fingers because ambitious firms who have got cats die and, really good

solid propositions, cannot get the funding they need to make this a

reality. Thank you bring much for coming in to talk to is this

evening. And now, a quick look at the papers.

In the Scotsman, Libya joins probe into Lockerbie bombing. Two

prosecutors are now on the enquiry. The Daily Telegraph says that

fortysomethings face a bleak future, and that story is on the front page

of the Daily Mail as well. Apparently, those born in 1960s and

70s will be poorer than their parents. That is all for me.

I will be back on BBC Radio Scotland tomorrow at 6am. Gordon will be here

tomorrow night. Good night. It will turn quite cold overnight at

the rain fades away towards the southeastern corner. Patchy fog or

form after the rain, particularly in Wales and Lions. Or many, a dry

nights. Very few showers and Northern Ireland. The southerly wind

will push them away. The wind strengthened in the North of

Scotland by gale force the afternoon and there could be icy patches in

the morning. Some sunshine, but a chilly day in northern England. The

odd patch of fog lingering through the morning in the Vale of York will

stop some sunshine through the Midlands, especially the East

Midlands. Still an overhang of cloud in the south-east, rain coming back

in again during the afternoon. Across the south-west of England,

sunny spells lightly. Away from the south coast, early morning mist and

fog, and fog patches in Wales as well. That will lift into low cloud.

Some places could be grey all day. It could be a bit colder across

England and Wales, with still a chilly feel for Scotland and

Northern Ireland, despite the sunshine. Wednesday,