Scottish economy avoids double-dip recession

20th December 2010

The chief economist at The Bank of Scotland has outlined how the economy has avoided a double-dip recession despite growth being “not as positive as hoped for”. Growth has continued, albeit at a low level, for the past three months. This may in part explain the recent reductions in both home repossessions and personal insolvencies such as a protected trust deed.

A clear split in the progress of the economy has become apparent. The manufacturing sector has enjoyed good levels of growth with a rise in export orders thanks to increases in demand from both the US and China. Production and exports from the manufacturing sector have grown strongly.

However, the service sector is struggling. Leisure, business services and tourism have actually declined over the past quarter. Employment levels in this sector have declined and new orders are also down. The one area of strength within the service sector was financial services, which recorded a limited increase in activity.

Meanwhile the public sector continues to plan for large reductions in both spending and employment in the coming months and years.

As previously reported, 21% of Scots have unsecured debts in excess of £5000, with one in twenty having debts in excess of £25000. Few people are in a position to survive financially for more than a few weeks should their income cease.

While it’s encouraging to see the Scottish economy avoid a double-dip recession, it’s clear that many individuals remain vulnerable to the effects of employment cutbacks in both the service and public sectors. With high levels of personal debt and no financial safety-net for many, it’s predicted that 2011 may witness an unwelcome return to an increase in personal insolvencies such as trust deeds and the repossession of homes.

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