Growth rates in Scottish regions lead the UK

3rd August 2011

The BBC website has published an interesting study that has been put together by Bank of Scotland, it serves as an antidote to the recent worrying increase in Scottish trust deed cases. They look into which regions around the UK have enjoyed the greatest growth in individual economic activity over the decade spanning 1998-2008. Amidst the economic gloom and fears of a growth in personal debt and trust deeds, the survey provides good cause for optimism.

Inverness/Nairn/Moray, Badenoch and Strathspey was the area with the second highest growth in individual economic activity in the UK with an incredible 86% improvement. It was beaten only by East London (87%).

North Lanarkshire finished 4th in the UK (82%), Caithness & Sutherland and Ross and Cromarty were 5th (78%), Edinburgh was 7th (73%) and Glasgow 10th (71%). The UK average was 58%.

It may be that these gains are continuing at the current time. The Scottish labour market appears to be performing better than the UK average which is likely to support earlier economic growth and recovery.

How do these statistics compare to the number of people that are finding themselves in serious debt trouble and therefore turning to serious debt measures such a Scottish trust deed or their equivalents elsewhere in the UK? Scotland seems to be faring better:

In Scotland the first quarter of 2011 (compared to the first quarter of 2010) saw a reduction of 23% in the number of protected trust deeds.

Elsewhere in the UK, the number of IVA cases (a debt solution in some ways comparable to a Scottish trust deed) went down by 8%.

House prices are comparatively low in Scotland compared to the average in the rest of the UK. Heavy mortgage costs often push people into taking out other debts; with lower average mortgage sizes it’s hoped that Scotland will see fewer people become exposed to debt difficulty and applying for a Scottish trust deed when mortgage rates increase.

The UK media is currently obsessed with predictions of financial meltdown for householders around the UK. However, it seems as though residents of Scotland may not be quite as exposed as some of their neighbours.

Despite all of this positive information for Scotland, a recent R3 report says that Scots are taking on more new debt than others around the UK. As is often the case when looking at economic indicators, the evidence of what’s really happening is in many ways contradictory.

Personal debt does remain a considerable problem for many people. In this respect however residents of Scotland may also be in a better position than those that live elsewhere in the UK. An IVA (used in similar circumstances to a Scottish trust deed elsewhere in the UK) has a typical term of five years (often extended to six years in lieu of home equity) compared to the typical three year Scottish trust deed. No equivalent of the debt arrangement scheme (which avoids insolvency but provides interest freezing and legal security) exists elsewhere in the UK leaving people to consider the less certain debt management plan option.

The personal financial environment around Scotland is certainly tough and many people are struggling. However, the infrastructure of effective debt solutions and the positive economic signals may reassure people that there are both reasons for hope and an effective safety-net where it is required.

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