Scotland’s economic performance – beyond the headlines



The good news Scotland’s unemployment rate has fallen, finally delivering some good news on the state of our economy.

Office for National Statistics (ONS) figures for June to August put the jobless total north of the border at 106,000 - down from 120,000 in the previous quarter. That’s an unemployment rate of 3.9 per cent, marginally below the UK-wide figure of 4.0 per cent.

The SNP constantly complains that it does not have the levers to grow Scotland’s economy, despite the recent extension of devolved powers.

But Finance Secretary Derek Mackay was quick to take the credit for this latest unemployment data, claiming ‘our ambitious economic strategy will create the right environment for job growth’.

As always with the SNP, when things go well it is thanks to the Nationalist administration, and when things go wrong it is Westminster’s fault.

Beyond the headlines, however, economic performance is not as encouraging as the Scottish Government would have us believe. The bad news Perhaps confusingly, the unemployment rate is not the proportion of the total population who are unemployed; it is the proportion of those who have been actively seeking work within the last four weeks and are available to start work within the next two weeks.

The wider definition of ‘economically inactive’ people are those who are not in employment but do not meet the definition of unemployment - because they have not been seeking work within the last four weeks and/or they are unable to start work within the next two weeks. It therefore includes those who are not looking for work – as well as students and people looking after a home or family.

Crucially, over the past year, Scotland’s rate of economic inactivity has grown by 0.5 percentage points to 22 per cent. That’s higher than the UK figure of just 21.2 per cent.

The ‘employment rate’ is also another way of analysing economic performance, and this measures the proportion of people aged from 16 to 64 years in work.

The number of Scots in employment during the most recent quarter was 2,551,000 (74.9 per cent) - down from 2,570,000 (75.5 per cent) in the previous three months. So the picture is not as rosy as the headlines suggest. Constitutional uncertainty Businesses don’t like uncertainty. A survey by the Scottish Chambers of Commerce published today has found declining optimism among firms in the third quarter of the calendar year at 21 per cent - up from 15 per cent in the previous period.

Neil Amner of Anderson Strathern, and chair of the Scottish Chambers of Commerce Economic Advisory Group, said: “Our survey results for the third quarter of 2018 suggest that the Scottish economy continues to be resilient, but firms are becoming cautious as uncertainty grows around the future trading environment with the European Union.” Regardless of views on Brexit, constitutional uncertainty concerns businesses.

The last thing the economy needs is more uncertainty, which is why the SNP should take the threat of a divisive second independence referendum off the table. Conclusion Scotland’s economy is resilient and there has been a very welcome drop in unemployment. But, beyond the headlines, there are also reasons to be concerned: the increase in the rate of economic inactivity; the fall in the number of Scots in work; and the declining optimism of businesses.

Strong economic growth is vital for Scotland and the people who live and work here. That’s why we need a government which is fully committed to growing the economy, not one that aims to increase uncertainty by pressing for an unnecessary second independence referendum.

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