Tag: Economy

Government set to act on pay day lenders

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The Westminster government is to introduce legislation to cap the cost of payday loans. In a move that’s likely to be welcomed by campaigners, the Treasury says there is “growing evidence” in support of the move.

The cap will be included in the Banking Reform Bill, which is currently going through Parliament, and the level of the cap will be decided by the new regulator the Financial Conduct Authority (FCA).

Chancellor George Osborne told the BBC there will be controls on charges – things like arrangement and penalty fees – as well as on interest rates. “It will not just be an interest rate cap, you’ve got to cap the overall cost of credit,” he said.

Although the level of the cap is yet to be determined, the announcement will be welcomed by opposition and campaign groups who have been urging the government to take action against some pay-day lenders’ practices: eye-watering interest rates and hidden charges which hit the poorest hardest and drive desperate people deeper into debt.

payday loansJust last week, Citizens Advice Scotland claimed that many payday lenders in Scotland are breaking the promises they made last year to clean up their act. According to CAS research, lenders continued to break ‘most of the pledges in their own code.’

The main points were:

  • less than half of payday lenders in Scotland are telling people that loans should not be used for long-term financial problems;
  • only 1 in 3 are checking peoples’ financial background before giving them a loan;
  • only 14% of customers felt the lender was sympathetic when they got into difficulties repaying the loan; and
  • only a third of lenders are warning their customers about the dangers of roll-over loans.

CAS Chief Executive Margaret Lynch said: “When the payday lenders published this voluntary code last year we made clear we would be watching them like a hawk to make sure they kept to their word. Because there’s no point making promises if you don’t live up to them.

“Our survey results – together with the experience of other clients we see every day in the CAB – show very clearly that this Code of Conduct Is being ignored repeatedly.

“Across Scotland, CAB advisers are currently seeing over 100 cases every week of people who are in crisis debt to a payday lender. That’s a third higher than this time last year. Our evidence is that many lenders are operating in ways that result in people getting into debts they can’t handle.

“So the Payday Lenders have had their chance to clean up the industry, and they have failed. It’s time now for the regulators to step in and do it properly.”money

Green shoots? Scotland’s economy ‘gaining momentum’

house soldWhat with welfare cuts, payday loans, food banks, escalating prices and zero-hour employment contracts it’s maybe hard to believe that things really are getting better, but an increasing number of indicators suggest that the economy is starting to pick up and that a recovery – however fragile – is under way at last.

House sales are on the rise, retail sales are picking up, there is growing consumer confidence and employers and business leaders are cautiously optimistic that the worst is now behind us.

Scotland’s economy is “gaining momentum”, according to a new report published yesterday. The latest State of the Economy report provides an analysis of recent economic developments  in Scotland and the wider global economy. The report also looks at recent labour productivity trends in Scotland.

The report highlights improvements in both output growth and employment in Scotland’s economy over the last year. Chief Economist Dr Gary Gillespie describes a more positive environment for Scotland and its key trading partners, which can support a more sustained pick-up in investment, exports and growth.

Key points in the report include:

  • Growing signs of a global recovery starting to take root in 2013, especially when compared to a disappointing 2012.
  • Over the year, Scotland has seen growth in output and a general improvement in all headline labour market indicators.
  • In contrast to the UK where productivity measures have fallen during the recession, output per hour worked (the key measure of labour productivity) in Scotland has risen and is now approximately 3.5% above pre-recession levels.
  • A permanent improvement in productivity in Scotland would  allow for potentially stronger growth in Scotland once demand returns to previous levels.  This growth in output will be required to see a sustained recovery in the labour market, particularly in full-time employment, and to support improvement in real wages.
  • Recent output growth and analysis of the underlying nature of the recession in Scotland suggest the potential for Scotland’s recovery to take hold throughout 2013, with a return to pre-recession levels in 2014 across the economy as a whole.

Commenting on the report Finance Secretary John Swinney said:

“Though headwinds still remain, the general outlook for Scotland is of an improving picture through 2013 with the recovery strengthening in 2014.

“Recent economic indicators have seen Scotland outperforming the UK both in terms of output and with higher rates of employment and lower rates of unemployment and inactivity. The most recent GDP data shows that the Scottish economy grew by 1.2 per cent over the year to Q1 2013 compared to 0.3 per cent in the UK.

“Today’s report confirms these positive trends. This  analysis suggests that the global economic outlook will continue to improve this year and Scotland can make the most of the opportunities that will come our way as a result.

“Particularly encouraging is the recovery in productivity which is now above pre-recession levels, which if sustained should lead to a further improvement in both output and the labour market.”

Unsurprisingly Mr Swinney believes that independence would ensure a stronger Scottish economy. He went on:

“While the State of the Economy report highlights the opportunities for Scotland, it also underlines the fragility of the recovery across the UK.  We will continue to press the UK Government to take action to help our businesses move forward and, in turn, drive growth in the economy.

“With the full economic levers of independence we could do more to put Scotland more securely on the road to recovery.”

Is the future looking brighter? Do you feel more optimistic?

Let us know!

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The gloves are off: Osborne and Swinney in fight over money

money-001In the latest of what promises to be a long series of cross-border skirmishes two political heavyweights squared up to each other over Scotland’s future currency yesterday. In the red (white and blue) corner we had Westminster’s George Osborne while in the blue (and white) we had Holyrood’s John Swinney.

Old Etonian ‘Gentleman George’ Osborne is well versed in the Marquis of Queensberry Rules but ‘Slugger’ Swinney is a capable street scrapper; in a bruising contest of contrasting styles neither fighter landed a knock out blow, so there’s sure to be a rematch soon. And it’s no clearer whether we’ll be spending pounds, euros or even dollars here in Scotland after next year’s referendum

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The clash came following the publication of a report on Scotland’s currency and monetary policy, helpfully produced by the Westminster government to ‘inform the debate on Scotland’s constitutional future’, launched by Chancellor of the Exchequer, George Osborne, and Chief Secretary to the Treasury Danny Alexander in Glasgow yesterday.

The report reviews how the current UK currency and monetary policy arrangements work and examines the options in the event of independence. The analysis sets out in detail the advantages and disadvantages of the potential currency options open to an independent Scotland, including: a formal sterling currency union with the continuing United Kingdom; using sterling unilaterally, with no formal agreement; joining the euro; or introducing a new Scottish currency.

The paper concludes that none of the options under independence would serve Scotland as well as the current arrangements in the United Kingdom, which is one of the most successful monetary, fiscal and political unions in history.

All of the alternative currency arrangements would be likely to be less economically suitable for both Scotland and the rest of the United Kingdom.

Osborne (2)

Speaking during his Glasgow visit Chancellor George Osborne (pictured above) said it would be a “very deep dive into uncharted waters” if an independent Scotland kept the pound in a currency pact with the UK, and added that there was no guarantee that the UK and Scotland would be able to come to an agreement on a currency union. That would mean a separate Scotland was left with three options – unilaterally keeping the pound, creating a Scottish currency or joining the euro.

Mr Osborne said: “All of these alternative currency arrangements are less suitable economically than we have now for both Scotland and the rest of the UK. The fundamental political question this analysis provokes is this – why would 58 million citizens give away some of their sovereignty over monetary and potentially other economic policy to five million people in another state?

He added: “Let’s be clear – abandoning current arrangements would represent a very deep dive indeed into uncharted waters. Would a newly independent Scottish state be prepared to accept significant limits on it’s economic sovereignty? To submit it’s economic plans to Westminster before Holyrood? The only way to be sure of keeping the pound as Scotland’s currency is to stay in the UK.”

However the Scottish Government has commissioned it’s own study and believes that a Sterling zone monetary union is the best option for an independent Scotland.

The Scottish Government’s currency paper, also published yesterday, fully endorses the findings of the Fiscal Commission Working Group’s expert report that as an independent country in a Sterling zone Scotland would have the powers needed to exploit areas of comparative advantage and also tackle those areas where we need to improve performance.

Scottish Government – Currency

Commenting on the paper, Finance Secretary John Swinney (pictured below) said: “A Sterling zone, with the pound as a shared currency will provide the full flexibility to set tax and spending decisions to target key opportunities and challenges in Scotland.

Swinney

“The sharing of the pound between an independent Scotland and the rest of the UK is the common sense position supported by the Fiscal Commission. A sterling zone is also in the overwhelming economic interests of the rest of the UK every bit as much as it is in the interests of Scotland. An independent Scotland using the pound will mean Sterling’s balance of payments will be massively supported by Scotland’s huge assets, including North Sea oil and gas – which alone swelled the UK’s balance of payments by £40 billion in 2011-12.

“The Fiscal Commission Working Group includes two Nobel Laureates, and their expert report – having examined several possible currency options – concluded that sharing Sterling with the rest of the UK is the best option, offering freedom and flexibility for Scotland to develop our own taxation and spending policies to boost growth and address inequality. At present, the Scottish Parliament controls just seven per cent of Scotland’s revenue base, and that would only increase to 15 per cent under the terms of the Scotland Act. With independence, Scotland will control 100 per cent of our revenues, which is what it needs to be to build a stronger economy and fairer society.‪

“The combination – which only comes with independence – of keeping the pound, accessing Scotland’s abundant resources, and taking decisions on tax and other economic policies that are right for Scotland, is the best way to boost jobs and growth.

‪“Scotland’s finances are consistently stronger than the UK’s – generating more revenue per head than the rest of the UK in each one of the past 30 years – and Scotland has had a lower fiscal deficit than the UK over the past five years. With the additional economic levers that independence will provide, and the up to £1.5 trillion asset base provided by Scotland’s oil and gas reserves, an independent Scotland will stand on a strong financial footing.

“Next year’s vote is the choice between unlocking the opportunities independence will open up or continuing to allow economic and welfare policy to be set by a Westminster system that isn’t working for Scotland.”

A deep dive into uncharted waters, or unlocking opportunities?  Ultimately, you’ll decide next autumn.

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Scots shops still in doldrums despite slight UK recovery

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Scotland is lagging behind the UK as a whole in the number of shoppers being attracted to retail outlets, according to a new report. Scottish Retail Consortium says that February’s total retail footfall was down 2.5% in Scotland compared to last year, while the UK as a whole managed an average increase of 0.8% over the same period.

Only North England and Yorkshire (down 2.7%) fared worse than Scotland in the survey, and Scottish Retail Consortium director Fiona Moriarty believes that the disappointing Scottish figures reflect low levels of consumer confidence and lower levels of sales growth.

“Although February’s sales figures showed some encouraging signs of improvement, we are reminded that the economic and trading environment remains fragile,” she said. “Scottish retailers will be hoping that the arrival of spring and seasonal lifts from Mother’s Day and Easter help to elevate this underwhelming figure into more positive territory in the coming months.”

The report confirms the tough conditions faced by retailers across the country. Recent research by PwC and the Local Data Company revealed that the number of stores closed by retail chains soared over the past twelve months, with major chains shutting an average of twenty shops a day last year. That figure increased in the last three months of 2012 as a spate of big household names went into administration.

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The face of the High Street is changing – shops selling products like CDs and computer games, cards and clothes are closing, often being replaced by payday loan providers, pawnbrokers and pound stores. The PwC survey found a reduction of nearly 1,800 shops over 2012, a ten-fold increase on the year before – and more High Street chains fell into insolvency last year than ever before.

Latest figures estimate that as many as one in ten shops in Scotland is currently lying empty; just one more statistic for the Chancellor to consider as he puts the finishing touches to tomorrow’s Budget statement.

Council spearheads drive to create 20,000 jobs

The city council is calling on its public sector partners and Edinburgh’s businesses to help support the creation of 20,000 new jobs in the city. An ambitious five-year economic strategy for Edinburgh will be launched at a conference being hosted by the City of Edinburgh Council and the Edinburgh Business Forum this morning.

Businesses and other partners are being encouraged to join the Edinburgh Guarantee programme to give young people the apprenticeships and work opportunities they need to boost their job prospects. They are also being asked to get more involved in the city’s communities by investing in its social and community enterprises, act as ambassadors for Edinburgh and mentor new entrepreneurs.

City businesses are also being asked to share their knowledge and international connections with the Council to help attract vital new inward investment. Delegates at today’s event will be invited to contribute their ideas to help drive the strategy forward. The conference will be split into two sessions. The first will focus on outlining the national / local context and the second session will seek an endorsement from partners and will outline their role in taking forward delivery of the Strategy.

The sessions will be attended by business leaders including Lord Smith Chair of the UK Green Investment Bank, senior staff from Harvey Nichols in Edinburgh, Scottish Enterprise, Marketing Edinburgh, the Financial Times, Edinburgh BioQuarter, and Mama Tea. The Leader of the Council Andrew Burns and Chief Executive Sue Bruce are both speakers as well as Nicola Sturgeon, Deputy First Minister and Cabinet Secretary for Infrastructure, Investment and Cities. Robert Carr, past Chairman of the Edinburgh Chamber of Commerce will compère the event.

Speaking before the conference, Council Leader Andrew Burns said: “Scotland’s cities and their regions are key drivers of economic growth for the nation’s economy as a whole, so it’s really important that Edinburgh’s Economic Strategy is not just owned by the council, but by the whole of Team Scotland. Edinburgh was resilient during the banking crisis and has bounced back well, but in tough economic times the last thing we want to do is get complacent. With huge pressure on council resources, we need to invest where we will have the most impact and closing the jobs gap is absolutely our number one priority. Joblessness creates major social costs for the whole city, and tackling this issue head on now will help us lay the foundations for a new phase of growth in Edinburgh over the next ten to 20 years.”

Sue Bruce, Chief Executive of the City of Edinburgh Council said: “The new strategy will help us to invest in people and in places, to provide an excellent joined-up service to businesses and to pool our efforts with partners.  We believe this is the best route to help create the right conditions for new jobs. The vision of the Edinburgh Guarantee, that all sectors of the city work together to ensure that every school leaver in Edinburgh will leave school with the choice of a job, training or further education opportunity open to them, is of vital importance to the future economic health of the city. Focusing on jobs, engaging the whole Council in economic development and increasing collaboration with our partners in the city are all central to delivering our bold targets to ensure that we play a major role in boosting Edinburgh’s economy.”

Hugh Rutherford, Chair of Edinburgh Business Forum and a partner at National Property and Planning Consultants, Montagu Evans said: “No one partner or organisation in the city has sufficient influence to drive development of the economy alone, so it is critically important that we pool our knowledge, expertise and resources to ensure Edinburgh remains an attractive place to do business. We want businesses to work with us to get people in the city back to work and that means engaging with the Economic Strategy to ensure sustainable economic growth.”

Further information on the Economic Strategy

Forged in the wake of the banking crisis, the Council’s new Economic Strategy is the first to focus on the Scottish capital and the part it plays in the wider regional and Scottish economy. It follows the largest and most wide-ranging economic analysis ever undertaken in the city.

The ‘Strategy for Jobs’ responds to a widening jobs gap – rapid growth in the working age population means that by 2018 there could be up to 37,000 more people looking for work in the city than jobs available – and sets out a pioneering ‘Whole Council’ approach to address this.

The Economic Strategy sets out three key targets for 2012-17: to support the creation and safeguarding of 20,000 jobs; to support £1.3 billion of infrastructure investment in the city and to help 10,000 people into work or learning.

These objectives will be achieved through four programmes of activity with detailed action plans: investing in the city’s physical development; supporting inward investment; supporting businesses and helping unemployed people into work or learning.

Key highlights include the completion of Edinburgh’s tram project; maximising low-carbon opportunities with the arrival in Edinburgh of the £1 billion UK Green Investment Bank; engaging with a target list of potential inward investors in key city regions of the Middle East, China, North America and London; the further development of the ‘Edinburgh Guarantee’, a collaborative initiative with businesses to secure training, education or employment for every school leaver in Edinburgh; the creation of a dedicated new hub for business customers at the City of Edinburgh Council’s headquarters; and the creation of ‘Integrated Employability Service’ that will work with national agencies to provide a ‘no wrong door’ approach for job seekers across Edinburgh. Extensive public consultation was carried out from July to September last year on a comprehensive analysis of Edinburgh’s economy – The Edinburgh City Region Economic Review. This was the largest and most wide-ranging consultation on the economy ever undertaken in the Capital. Its findings underpin the key areas of action in the new Economic Strategy.