Page last updated at 10:14 GMT, Wednesday, 22 April 2009 11:14 UK

Scotland officially in recession

Scottish bank notes
Scottish GDP has fallen for two successive quarters

New figures have finally confirmed that the Scottish economy fell into recession at the end of last year.

They were published just hours before Chancellor Alistair Darling was due to unveil his Budget at Westminster.

Two months ago figures for the UK as a whole showed gross domestic product (GDP) suffered its second successive quarter of negative growth.

Now GDP statistics for Scotland have also shown that it fell into recession in the final three months of 2008.

Scotland's chief statistician said GDP fell by 1.7% in the final quarter. It followed a fall of 0.8% in the previous quarter.

Further official statistics showed unemployment in Scotland rose by 5,000 over the three months to the end of March.

But the unemployment rate remained lower than elsewhere in the UK.

We know the effect job losses have on families and that is why we are doing everything we can to get real help to people losing their jobs
Jim Murphy
Secretary of State for Scotland

Scottish Finance Secretary John Swinney said the figures highlighted the "scale of the economic challenge we face".

He added: "Although our labour market remains substantially stronger than the UK as a whole, further figures published today show unemployment is rising.

"Such circumstances demand swift, decisive action to support jobs and help businesses both survive and emerge stronger when the recovery begins to kick in."

The fall in Scottish GDP was broadly in line with those of several other economies, with the UK, the eurozone and the United States all experiencing a 1.6% drop in the final quarter of 2008.

Output declined more sharply in the export-orientated economies of Germany - by 2.1% - and Japan, which suffered a 3.2% drop.

The latest International Labour Organisation (ILO) figures, also published on Wednesday morning, showed the number of people out of work in the three months to February, including those not eligible for benefit, rose by 5,000 to 143,000.

Larger rise

The number of people claiming jobseeker's allowance saw a larger rise, jumping by 6,000 to 119,400 in the month of March.

This level was an increase of 50,600 on March last year.

Secretary of State for Scotland Jim Murphy said rising job losses were the "real effect of damaging global economic conditions", but added that the UK Government was determined to "stop the newly unemployed becoming the long-term unemployed".

Mr Murphy said: "We know the effect job losses have on families and that is why we are doing everything we can to get real help to people losing their jobs.

"The government has set out and established a wide range of initiatives to deliver real help to families and businesses. By supporting individuals and stimulating the economy, we are working hard to counteract today's difficult conditions."

Our quarterly business survey revealed that there may be a few glimmers of hope on the horizon
Liz Cameron
Scottish Chambers of Commerce

CBI Scotland assistant director David Lonsdale warned that the economy had worsened since the period covered by the figures.

"With the wider UK economy firmly in the doldrums, the likelihood is that Scotland's economy won't perk up until well into next year," he said.

"Action to ease the difficulties firms face in terms of cash flow is a must, by reversing the rise in small firms' corporation tax, ensuring all public bodies settle supplier invoices within the target 10 days, and by early implementation of the proposed partial deferment of this year's bumper rise in business rates."

Liz Cameron, chief executive of Scottish Chambers of Commerce, said it came as "no surprise" that Scotland was now officially in recession, but urged the country to look to the future and plot the course for recovery.

"Last week, our quarterly business survey revealed that there may be a few glimmers of hope on the horizon, with manufacturers in particular predicting a return to growth in export orders by the spring of next year," she said.

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