Salmond issues economic warning

Alex Salmond hopes for £1bn worth of investment

The Scottish first minister has warned it will be "extremely difficult" for the country's economy to keep growing.

Alex Salmond was speaking on the BBC's Politics Show as he pressed the UK Government for a £1bn funding package to "inject demand and confidence".

The measures Mr Salmond wants included in the package will be set out when he convenes a special economic cabinet meeting in Edinburgh on Tuesday.

Labour branded the £1bn call a "dishonest" claim.

Mr Salmond said an example of the measures he would be pushing for as part of the package would be the release of £120m of Scottish fossil fuel level payments that are currently being held by Ofgem.

The first minister added: "It is no use to anybody else but us. The only reason we can't access and use that money now for investing in renewable energy, injecting demand and confidence, is that under the current Treasury rules it would be deducted from the overall spending limits across the Scottish Government.

It would be extraordinarily foolish not to understand that the impact of this global financial crisis will not be felt Alex Salmond First Minister of Scotland

"That is an easy example of how we can access in these extremely difficult times, when we need demand and confidence and spending, £120m at no disbenefit to anyone that would be of substantial benefit in Scotland at the present moment."

Mr Salmond said politicians should not simply "go on about how difficult the problems are" because "folk know how difficult the problems are" and said they should not accept that a deep recession is inevitable.

"I think the key thing is to avoid recession," he said. "Three weeks ago we had the lowest unemployment figures on the ILO measurements in Scottish history at 4.2% - we were doing extremely well relative to other places."

"Of course, events have moved very, very sharply since then and it would be extraordinarily foolish not to understand that the impact of this global financial crisis will not be felt.

"The task of politicians should be to try and find the solutions and the answers to lead the economy out of it, to avoid a deep recession, not accept that one is inevitable."

'Cynical attempt'

But he conceded: "I think that when the figures come through for the present period it will be extremely difficult for Scottish output to continue increasing. The last three quarters we have figures for we have either matched or exceeded UK output, but we are not immune from these global financial trends."

Labour's former finance minister Andy Kerr dismissed the £1bn suggestion put forward by the first minister.

"This package is another cynical attempt at spin and it is dishonest to claim for funds that are not available," he said.

"Alex Salmond should abandon his proposals for the Scottish Futures Trust (SFT) and get on with capital programmes and infrastructure development. The CBI and construction industry are crying out for them.

"The parliament's economic committee was told last week by representatives from the construction industry that delays in SFT were creating a black hole in Scotland's infrastructure programme."