Scotland could face a second recession in six months
Scotland’s economy could be in for another downturn in six to eight months, as the economy falters and people lose confidence.
The UK economy contracted for the first time in seven years in the June quarter, with the latest report showing the gross domestic product contracted by 0.4 per cent in the year to June.
It means the economy will contract by 0,000 jobs for every 100,000 people.
The Office for National Statistics (ONS) said: “We estimate that, unless the economy improves, Scotland’s unemployment rate will rise from 4.2 per cent to 6.3 per cent by the end of the year.”
There are also signs that the impact of the economic crisis on the job market will be felt in the long-term.
While there were 1.5 million job losses in the first quarter, the number of people in work fell by 1,000, and by another 200,000 since the beginning of March.
It comes after the Scottish Government said it was planning to make an additional 1.6m cuts over the next year, a sharp rise on the previous year’s 2.5m.
But there is concern that job cuts may not be enough to keep the economy afloat.
It has been suggested that there are more than 300,000 unemployed people in Scotland, which is the highest rate of unemployment in the UK.
However, the Scottish Labour Party is calling for a “significant increase in unemployment benefits” which are currently only available to people aged over 26.
“If we have to start paying people to work, that will put us at risk,” SNP leader Nicola Sturgeon said.
“It will make us more vulnerable to a third recession.”
Austerity measures imposed by the SNP have had a devastating effect on Scotland’s public finances, which has resulted in a £2.7bn reduction in the size of the Scottish budget in the past three years.
“There are now around 1.8 million fewer people working in Scotland than at the end, the latest data shows.”
We are in a period where there are a number of other factors affecting the economic outlook, such as the rise in the cost of living, a decline in the value of the pound and a fall in the level of the consumer price index,” the ONS said.
Scottish Labour has called for a further increase in the amount of borrowing by the Scottish government to make up for the loss of revenue.
However Mr Sturgeon said: “[The Scottish government] is in a position to take on debt more quickly than the SNP, and this would help us in making the right decision on what we do.””
We know that borrowing has been a huge factor in the Scottish economy in the last five years, and we need to do everything we can to encourage investment in Scotland’s businesses and jobs.
“The Scottish Government is due to hold a second round of talks on the UK economy tomorrow with the chancellor George Osborne and the Scottish Business Association, which represents employers, about the impact on employment.