Scotland braced for longer recession

The head of an economic think-tank has called on "increased competitiveness" from policy makers in Scotland, if the economy is to be revived.

The calls come after it was reported that Scotland's economy could take longer than other home nation's to recover.

Executive Director of the Adam Smith Institute, Tom Clougherty, told The Journal: "The reason, ultimately, is the disturbing growth of government in Scotland.

"The public sector wage bill has risen by 55 percent since 1999—with 1 in 4 now working for the state. Public spending in Scotland rose from 50 percent GDP in 1999 to 56 percent in 2007/8.

"On current trends, it is set to reach 67 percent by 2012/13."

These figures would potentially leave Scotland running a close third to Iraq and Cuba as countries most reliant on state spending.

Mr Clougherty added: "What Scotland needs to boost its economy is policies that increase its competitiveness, attracting investment and encouraging entrepreneurship.

"Our research has suggested that if Scotland were to reduce its corporate tax rate to 12.5 percent to match Ireland’s, it would quickly overtake the rest of the UK in terms of economic growth and average household income."

Minister of Finance John Swinney showed confidence in the Scottish government's draft budget in his foreword that claimed: "In the midst of the economic recession, we argue for the acceleration of capital expenditure to assist the economy and retain employment. This has been secured and has benefitted the economy."

In response to the Scottish government's economic recovery plan, the Confederation of British Industry drafted a 33 point plan response which they believe will stimulate Scottish industry.

The plan included tax incentives for local authorities to encourage business growth and also incentives for students applying to study science, technology, engineering and math (STEM) subjects.