There have been calls for urgent action on the economy after it emerged that Scotland only narrowly avoided a double-dip recession.
Latest gross domestic product (GDP) figures showed the economy was almost stagnant during the first quarter of the year, after a significant fall at the end of 2010.
A recession is officially defined as two successive falls in GDP.
The news came on the same day that it was revealed the number of people going bust has shown a dramatic rise and retail sales were described as “deeply disappointing.”
Government figures showed GDP rose by only 0.1% between January and March, compared with 0.5% in the UK as a whole.
The construction sector suffered particularly badly, with output falling by 3.6%, but the production and service sectors both grew.
The production sector increased by 0.9% and the service sector by 0.3%.
Meanwhile official figures from insolvency supervisors Accountant in Bankruptcy showed 5319 personal insolvencies in Scotland in the first quarter of this tax year, up 25% on the previous quarter.
And retail sales in June were described as “deeply disappointing” after figures showed no change from the same month last year. Like-for-like sales were down 1.8% and total sales levels did not change compared with 2010.Weather’s effectCBI Scotland assistant director David Lonsdale said the GDP figures showed the recovery “continues to be choppy and lacks vigour.”
He added, “Expansion in some sectors is being offset by weaker performance in others, with the contraction in construction reflecting an overhang from the appalling weather experienced this past winter.
“We continue to believe, however, that the economy can further improve this year and next but that the pace of growth is likely to be sluggish.”
He said Scotland should be “less reliant” on public spending and have greater emphasis on private sector growth.
Chief executive of the Scottish Building Federation Michael Levack also called for action.
He said, “We need further government action on bank lending, on affordable housing investment and on securing Scottish borrowing powers for capital investment to prevent this downward trend from continuing for the remainder of 2011.”
Andy Willox, the Federation of Small Businesses’ Scottish policy convener, said the figures “should focus minds” at both Holyrood and Westminster.
He called on Westminster to take action on fuel prices and cut VAT to help businesses.’Plan B’ neededScottish finance secretary John Swinney said the blame for the figures lay with the UK Government.
He said, “Scotland’s recovery needs to be strengthened and the GDP figures underline the urgent need for an economic Plan B, or flexibility, from the UK Government.
“The Scottish Government is building recovery in Scotland, with a growth strategy that has contributed to eight consecutive reported months of falls in unemployment, but more needs to be done.”
But Jo Swinson MP, deputy leader of the Scottish Liberal Democrats, said, “The Scottish Government needs to explain why Scottish growth continues to lag behind the rest of the UK.”
Scottish Labour finance spokesman Richard Baker said, “While the UK figures show the Tory-led government cuts are too fast, too deep, and are damaging our economy, the fact is that the SNP’s boast that the recession in Scotland has been shorter and shallower is just not credible.”
Tory MSP for Mid Scotland and Fife Liz Smith said the figures showed the UK Government approach to the economy was working.
She said, “The fall in construction output will need to be addressed by the £16 million Scottish Conservatives secured in the last budget money which will help the construction industry by creating over 5000 new jobs.”