In the current state of flux that charcterises the politics that underpin our lives, it would be unsurprising if some of us were not a little down from time to time. It’s not just the politicians who can depress us though. When it comes to the Scottish economy it’s not hard to find portents of doom. This is being written in the week before the growth figures for the first quarter of the year are released, but if they are negative then Scotland will be officially in recession. By the time you read this you’ll know whether we’re in that dire state. If it happens, then you’ll know about it soon enough - and then stand by for the political blame-game!
The most recent Fraser of Allander Institute report is upfront in its assessment of the overall state of the economy, stating, “Whether or not Scotland formally enters recession when the next set of data are released is in the balance. We believe that the Scottish economy will still grow over the year as a whole (and more quickly than last year – my underlining) but further negative quarters of growth are highly possible.”
The press, who love a “good” bad news story, have obviously latched on to this and used the FoA report to generate the sort of negative headlines that used to sell newspapers but now generate clicks.
It does drive me to despair at times. Irrespective of whether the Scottish economy is technically in recession or misses that unhappy accolade by a whisker, there is no doubt that the overall state of the economy is not brilliant, but that doesn’t mean that everything is terrible. The same FoA report that all the press have latched on to also stresses that, “the Scottish economy will pick-up in 2017.” To be fair, it then goes on… “although its central forecasts for growth of 1.2% in 2017, 1.4% in 2018 and 1.6% in 2019 are below trend with Scotland likely to continue to lag behind the UK as a whole.”
However, tucked away in the dire warnings there is some more encouraging stuff. There are some sectors that are doing quite well – notably financial and business services and also (helped by the weak pound) drink, tourism and food. These are expected to help us steer a path in the more upwardly direction envisaged by the FoA Institute for the next few years. In addition, unemployment is at a record low and in our own area of expertise, Construction and Property, the Markit reports from across the recruitment industry show that we’re still very much in positive territory, although the CITB does acknowledge that over the next five years we’re likely to see a slight overall decline in construction activity in Scotland, largely as a result of a decrease in the number of infrastructure projects, although these will be offset by growth in other areas.
The reasons for the decline in infrastructure are not hard to find. Year on year performance is obviously measured against what has gone before, and in the last few years we’ve seen some massive projects in Scotland, notably the soon-to-be-opened new Forth crossing and the M74 and M8 road upgrading. However, as the CITB acknowledges, this doesn’t mean a decrease in the demand for jobs. On the contrary, it’s expected that c. 12,000 new construction workers will be required to meet the demand.
In addition, to return to the politics which I referred to at the start, it can’t have escaped your notice that there is now a growing backlash against “austerity” and, as a consequence, the major parties seem rather keen on investing in infrastructure. The huge numbers of youngish people who want a home to own are going to influence government spending on housing in particular and the aftermath of the dreadful Grenfell Tower fire is likely (putting aside any political considerations) to lead to even more demand for improvements to the existing stock and better quality housing in general. Planning regulations and the house-builders’ plans will come under more pressure and I would not be surprised to see an upsurge in new home building over the next few years, conveniently in time for the next election!
The truth is that we can’t separate the politics from the economy. That said, the rates of growth may vary and decline and the political pressure wax and wane, but overall we’re growing in construction and it would be nice if more people shouted about the positive than the negative (remember that underlining in the quote in the second paragraph above). We can too easily talk ourselves into a recession, with the press happily in the vanguard, yet equally we can, and must, stress the positive. There are going to be thousands and thousands more construction jobs available over the next few years.
Chris Peace, MD, Peace Recruitment
Stop press: the actual growth figure for the first quarter was 0.8%, far higher than expected. Admittedly, within this, construction showed a decrease, but I am confident that, for the (political) reasons outlined above, there will be more construction activity in all areas, especially housebuilding, in the next few years - and with this will come the jobs predicted by CITB.