Barely a month ago, all the talk was of higher spending, more money for welfare and an outlook unclouded by real world facts. But today the reality is impossible to ignore.
In the past few days warnings have poured in of a broad-based and intensifying economic slowdown.
On Friday, Scotland’s chief economist Dr Gary Gillespie warned that the growth pace last year at 1.9% was “significantly below” that of 2014 when it scored 2.7%. It also trailed the UK-wide rate of 2.2%.
And now we’re heading for the third successive year of a growth slowdown.
His report was published on the same day as a new survey from Scottish Engineering warning that the industry is “stagnating”, with more firms seeing order levels drop than those seeing a rise.
Bryan Buchan, chief executive of the trade organisation, said: “We appear to be marking time in terms of capital investment – partly due to market conditions arising from reduced activity in the UK Continental Shelf (offshore sector) and also in yet another tranche of uncertainty in terms of the imminent EU referendum.”
Yesterday brought a report from one of the country’s leading independent forecasters, the EY Scottish Item Club, that our economy is slowing more than previously expected. It now estimates growth of only 1.2% for this year, down on the Item Club forecast of 1.9% made only last December.
For next year it is forecasting growth in Scottish output of two per cent, compared with 2.6 per cent or the UK.
These figures do not include the impact of the falling value of output from oil and gas extraction, down by 8% this year.
The lower non-oil growth forecast reflects the drop in orders hitting the supply chain, particularly in engineering and some business services.
And cold reality has now dawned on calculations about the construction sector. Its performance was singled out as a reason for much of the slowdown
There will also, says the ITEM Club, be a drop in activity as big government-funded construction projects wind down. That has been an important part of maintaining at least some growth in the Scottish economy over the past two years.
The more buoyant parts of the economy, which should see growth continuing, focus on consumer confidence. That is why retail, hospitality and tourism are expected to see faster growth.
There may also be some support for growth from government spending linked to the City Deals.
While output from mining and quarrying, which includes the oil and gas extraction sector, is forecast to fall by a very large 8% this year, the only area in which Scottish growth is thought likely to match or out-perform that of the UK is in manufacturing.
There is growth forecast in that sector, though it is very weak, and in metals and machinery, it is expected to contract by 1% this year.
Said Dougie Adams, senior economic advisor to the EY Scottish Item Club, “In December, we reported an unsustainable, overdependence on the construction sector in Scotland for growth.
“This expansion is now easing, from a staggering 20% in 2014 to 11% in 2015, eroding the sector’s contribution of overall GDP growth.”
Finally, in case all these warning lights went unnoticed, a separate report on business sentiment by accountants BDO out yesterday finds that output and growth expectations last month had dropped to below trend rates.
The survey suggests a drop below long-term trend growth for the first time in three years. The sharpest drop has been in expectations of recruitment growth.
While there is a reasonable prospect of a partial recovery in 2017 and beyond, our growth rate will still be lagging that of the UK overall. Together, these reports highlight the need for urgent priority to be given to measures to boost growth and investment.
Of course it is a relief to see a recovery in the oil price. But it will take a considerable period of price sustainability before confidence returns to Scotland’s deeply beleaguered North Sea sector.
Yesterday brought a reminder that retrenchment continues, with a report from Bank of Scotland/Lloyds Banking Group that more than four in 10 of the UK’s oil and gas firms plan to cut costs further in response to the industry downturn.
In Scotland, 57% of companies surveyed within the industry and its supply chain said they had been severely or quite badly affected by the slump in oil prices, and 41% of firms across the UK. For every one job created last year, they said that six had been lost.
So it’s not enough for Gary Gillespie and the economy minister Keith Brown to take cover and mumble in the undergrowth with talk of “underlying resilience” – this would be steadily eroded if the impression gains that Scotland is a slow-growth area, more concerned with income distribution than boosting growth.
And it’s the sort of platitudinous talk that leaves Holyrood in a bubble of denial about the importance of growth – an issue, as Scot Buzz has continually highlighted, that was almost completely ignored in the May election campaign.
We don’t invent it, Mr Brown. We only report it.