SNP will miss key target on boosting economy

ALEX Salmond's ambitious target of raising the growth rate of the Scottish economy to UK levels by 2011 is now "extremely unlikely" to be met.

The verdict on the SNP government's key goal came from a leading economist yesterday as a new report warned that Scotland's recovery will be slower than the rest of the UK.

Cliff Lockyer, the co-author of the economic study, said the Scottish Government should "disregard" its ambition to catch up with the rest of the UK within two years. He suggested the goal was now almost impossible to achieve, unveiling the report predicting that unemployment in Scotland will rise by 40,000 to 234,000 next year.

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The document, published by the Fraser of Allander Institute at Strathclyde University, also forecast that it could be another three years before economic output in Scotland matches pre-recession levels.

The report blamed Scotland's inflated public sector for the slow rate of recovery compared with England.

"I think we would have to disregard those targets," said Mr Lockyer, an honorary research fellow at Fraser of Allander. "Even the government would want to revise them now and I think it is extremely unlikely that they will be met."

Despite the grim prognosis, the Scottish Government said it remained committed to the target set in 2007.

Business leaders agreed with Mr Lockyer's assessment.

"We have consistently supported the devolved government's stretching growth target," said David Lonsdale, the assistant director of CBI Scotland.

"However, this latest forecast puts attainment of the target in greater doubt, which makes it all the more important that Scottish ministers put in place a far bolder programme to reform public services, protect the support on offer to exporters and investment in key transport infrastructure, and aid firms' cashflow by introducing business rates transitional relief."

The Fraser of Allander economic commentary said Scotland was likely to emerge from recession by the end of the year, but warned that the economy could dip back into negative growth before recovery was complete.

The paper said unemployment would peak at 234,000 in 2010, while the number of people on Jobseeker's Allowance would rise from the October figure of 134,000 to 160,000 during next year.

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Scotland's larger public sector compared with England meant that the base for expansion was smaller north of the Border. The greater fall in growth in Scotland during the recession was put down to weaker performances in the financial, property and business sectors.

After the contraction of 2.5 per cent in the first quarter of this year in both Scotland and the UK, Scottish GDP fell by a further 0.8 per cent between April and June, compared with a smaller contraction of 0.6 per cent in the UK. The report predicted that the Scottish economy would perform "less strongly" than the UK's when 2009 figures were collated.

The report said: "Indications of recovery are weaker here than in many other UK regions. We therefore expect Scotland to emerge from recession in the fourth quarter (of 2009], with likely growth around 0.2 per cent but less strongly than the rest of the UK.

"There remains a possibility that the recession will not end in Scotland in the fourth quarter even though it does so in the UK economy as a whole.

"It would be a mistake to conclude that the economy's troubles are over once growth resumes and the recession ends."

The report pointed to the economic downturns of the 1930s and 1980s, which suggested recovery to pre-recession output has never taken less than 40 months, or three and a third years.

Although the economy is unlikely to contract in 2010, growth rates will be negligible, at only 0.1 per cent. In years to come, improvement will remain sluggish with growth rates of 1.1 per cent and 1.6 per cent forecast for 2011 and 2012.

Scottish Labour leader Iain Gray said the cancellation of the Glasgow Airport Rail Link showed that the SNP government had the wrong approach to the economy.

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"They are more interested in pursuing the narrow interests of the SNP than the interests of Scotland and ordinary Scots concerned about jobs and the economy," he said.

A Scottish Government spokesman said: "In Scotland we have a lower rate of unemployment and higher rates of both employment and economic activity than the UK as a whole, and this government remains totally committed to the target of matching UK growth by 2011."