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ISBN 978-0-7559-8271-4
THE SCOTTISH ECONOMIC
RECOVERY PLAN:
ACCELERATING RECOVERY
WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER
GREENER
© Crown copyright 2010
This document is also available on the Scottish Government website:
www.scotland.gov.uk
RR Donnelley B63580 03/10
Further copies of the document are available on request
Please contact 0131 244 3342 or

3 March 2010
The Scottish Government, 2010
THE SCOTTISH ECONOMIC
RECOVERY PLAN:
ACCELERATING RECOVERY
© Crown copyright 2010
ISBN: 978-0-7559-8271-4
The Scottish Government
St Andrew’s House
Edinburgh
EH1 3DG
Produced for the Scottish Government by RR Donnelley B63580 03/10
Published by the Scottish Government, February 2010
Further copies of this document are available on request
Please contact 0131 244 3342
or

100% of this document is printed on recycled paper and is 100% recyclable
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
THE SCOTTISH ECONOMIC RECOVERY PLAN:
ACCELERATING RECOVERY
CONTENTS
FOREWORD 2
1. INTRODUCTION 4
2. THE ECONOMY 11
The global economy 11
The Scottish economy 12
Impact on industry sectors 14
Impacts by age group and occupation 15
Impact on the regions of Scotland 16
Future prospects for the Scottish economy 16
3. INVESTING IN INNOVATION AND INDUSTRIES OF THE FUTURE 18
The low carbon economy 18
Scotland’s Key Sectors 22
Infrastructure investment 26
The central importance of internationalisation 27
Planning 29
Access to finance 31
Management and leadership 32
Procurement 33
Innovation 35
Remaining responsive to business concerns 36
4. STRENGTHENING EDUCATION AND SKILLS 39
Support for skills and training 39
Preventing new long-term unemployment 42
Providing additional opportunities for young people 44

Tailored learning support for those furthest from the labour market 45
Managing increased demand for education 45
5. SUPPORTING JOBS AND COMMUNITIES 47
Public sector capital investment 47
Supporting the regeneration and growth of our town centres 49
Maximising the community and employment impact of new housing 49
Supporting households 50
Public sector efficiency 52
FOREWORD
This is a time of transformation in global and domestic markets.
As economies around the world strengthen, new competitive
pressures will shape the structure of our economy. The labour
market pressures that emerged through the deepest recession in
living memory may continue for some time, but the next phase
of the economic cycle also heralds new opportunities for Scottish
businesses to develop new markets, and grow existing ones.
Across the public sector, our task is to remain responsive to the
new conditions. We must align behind the task of accelerating
our recovery and meet the challenge of maintaining the most supportive environment
for a strong recovery.
This update to the Economic Recovery Plan sets out a number of priorities for the
coming months.
Scotland’s future lies in the development of a low carbon economy. We are starting a
conversation on what that will mean in practice. Our commitments on renewables
and carbon capture and storage will help lead to the development of major new
industries in Scotland, and major new sources of employment.
In rapidly developing global markets, Scotland’s competitive exchange rate brings the
prospect of developing larger international markets for Scottish goods and services.
We will deliver additional support for Scottish businesses to internationalise. Building
on the success of Homecoming, we can also capitalise on the current conditions to

bring new visitors and new inward investment to Scotland.
Development in Scotland will be supported by an improved planning regime to
streamline support for new investment, continuing the major progress made since
2007.
2 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Contraction in the availability of finance lay at the heart of the recession, and access to
finance will be a necessary condition of a strong recovery. The latest Scottish Access to
Finance Survey shows some improvement in conditions for SMEs seeking finance. We
will reinforce this improvement through the continued development of the Scottish
Investment Bank this year.
Scotland’s natural and intellectual assets are world class, but for some time we have
failed to turn this into commercial success. We will scale up our support to
commercialise innovation in Scotland. And with our partners across the public sector,
we will place a renewed focus on improving leadership and management skills in
Scottish business.
Our major package of skills and training support, ScotAction, has supported flexibility
in the Scottish workforce through the pressures of recession. As growth returns to the
Scottish economy, employment risks remain. The Scottish Government can achieve a
great deal with the levers at its disposal, but as we attempt to accelerate our recovery,
we are undermined by the UK Government’s decision to remove its fiscal stimulus in
2010. The Treasury has an opportunity to support our Economic Recovery Plan by
releasing funds for further capital acceleration, allowing us to directly support
businesses and jobs across Scotland. We will continue to make the case in the run-up
to the UK 2010 Budget.
John Swinney MSP
Cabinet Secretary for Finance and Sustainable Growth
1. INTRODUCTION
This update to the Scottish Government’s Economic Recovery Plan is the first to come

at a time of rising UK GDP output. The Scottish economy, in common with that of
other developed countries, has not been immune to the stresses of a major recession,
with falls in output and increased pressures on employment. But as the rate of decline
in output eases and growth begins to return to areas of the economy, we can now
reflect more accurately on the long-term impacts of recession, and on the outlook for
the post-recession economy in Scotland.
The Plan has developed through an ongoing dialogue with Scotland’s businesses,
academics, community groups and individuals. With our partners in local government
and the Third Sector, we have developed a deeper assessment of the impacts of
recession across Scotland. As the public sector aligns behind a central theme of
accelerating recovery, a number of central priorities emerge for the coming year. Our
efforts are centred on stimulating lasting improvements in Scotland’s long-term
economic performance – in line with the Government Economic Strategy – through
three broad themes: Investing in innovation and industries of the future;
Strengthening education and skills; and Supporting jobs and communities.
Accelerating recovery
Optimism as As the world economy emerges from the deepest recession of a
growth generation, a global recovery is now underway. In Scotland,
returns growth returned to parts of the economy in the second half of
2009, with signs of further improvement in the last three months
of the year. As the recovery takes hold, there are still uncertainties:
growth in Scotland is only in its fragile early stages and the
fundamental impacts on the ‘real’ economy of a recession rooted
in financial market turmoil will not be fully apparent for some time.
But this is also a time of new dynamism in global and domestic
markets, where new trading links between partners can be forged.
The rebalancing that has already begun across the global
economy, will bring new opportunities for Scottish businesses in
new markets. And within Scotland, the domestic economy has
also begun to adapt to the post-recession conditions.

There are grounds for optimism in this new dynamic environment.
Scotland can continue to develop and exploit its rich comparative
advantages. We can further expand our international trade, taking
advantage of a newly competitive exchange rate to enter new
export markets. Scotland is a world-class destination for visitors
and for new investment – our tourism industry outperformed the
rest of the world in 2009 – and our education and skills base
continues to provide a platform for new employment
opportunities.
4 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
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Alignment across the public sector
The private sector will lead Scotlands recovery; the task for the
public sector is to maintain a flexible, responsive approach as
changes unfold over the coming months. Through the alignment
of key services and activities, and by maintaining our focus on
those key sectors that best exploit Scotland’s global competitive
advantages, we can create a supportive framework for sustained
improvement in our future economic growth.
Priorities as The Economic Recovery Plan has mobilised a range of cross-public
we enter new sector activities, designed to support the Scottish economy
growth through the pressures of a deep global recession. The Plan has
supported employment – directly through accelerated public
sector spending, and indirectly through our support for skills – and
it has mitigated some of the worst impacts of recession on
Scotland’s communities. These steps were part of the immediate
response to recession, but they have been designed to leave a
lasting positive impact.
As we begin to enter a new period of growth, a number of new

priorities emerge for the coming months.
Developing a low carbon economy
Scotland’s primary new economic opportunity lies in the
development of a low carbon economy. Addressing the major
economic costs of climate change is an economic and
environmental imperative. We have already taken a lead with the
most ambitious emission reduction targets in the world and the
move to low carbon is a necessary condition of meeting these
obligations.
Opening Scotland’s enviable natural resources, research expertise, and
discussion on industrial base provide the foundations to capitalise on the future
low carbon growth of renewable energy, carbon capture and storage, and
improvements in energy efficiency. We will shortly publish a
discussion document on the implications of the move to low
carbon for the Scottish economy.
Renewables The recent consent for the upgrade of electricity infrastructure
from Beauly to Denny releases huge potential to develop
Scotland’s renewables sector, where over 600MW of additional
capacity has been consented in the past 12 months, with a further
almost 2.7GW in the planning pipeline.
6 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
Offshore Offshore wind is the biggest near-to-market opportunity in
wind Scotland’s low carbon economy. The recently published National
Renewables Infrastructure Plan identifies a range of near-term
infrastructure needs and investment opportunities. We are now
developing a comprehensive off-shore wind route map with key
industry and public sector bodies, which will detail the steps to
create tens of thousands of new Scottish jobs and over £20 billion
of investment by 2020.
Carbon capture The Scottish Government will shortly publish a roadmap for the

storage development of a carbon capture and storage industry in Scotland,
setting key milestones for the creation of thousands of additional
jobs in the future.
Environmental The Scottish Government, Scotland’s Enterprise Agencies, the
and clean Scottish Environment Protection Agency (SEPA) and the academic
technologies sector are working together to develop a strategy to support the
development of the environmental and clean technologies sector
in Scotland. In the Spring, we will begin engagement with key
stakeholders to inform the development of this strategy.
Supporting internationalisation
A number of factors now come together to make increased
internationalisation one of the central priorities for the acceleration
of the Scottish recovery.
Correction of It is now apparent that there were major, unsustainable
global imbalances within the world economy as it entered recession.
imbalances These were most obvious in the financial sector, but they have also
influenced other globally traded sectors. As these imbalances are
corrected, we are likely to see a repositioning of individual
economies in the global economy, and restructuring of industrial
sectors within these economies. Financial and trade flows will alter,
bringing new opportunities for Scotland to exploit its comparative
advantages.
Developing Pre-recession, demand was supported by relatively cheap credit,
new sources and wealth generated by a decade-long boom in house price
of demand growth. Post-recession, we will have to look particularly to foreign
markets to support further growth in the demand for Scotland’s
goods and services.
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Competitive The movement in exchange rates over the course of the last

exchange rate 18 months now makes Scotland even more competitive in export
markets. The competitive exchange rate will act as a platform to
attract new visitors to Scotland, and new inward investment. The
latest business surveys suggest that the decline in exports from
Scottish firms may have started to bottom out, with some sectors
experiencing an increase in export activity in the second half of
2009. There was also some encouragement from the small
increase in manufactured exports in the third quarter of 2009.
Scaling-up Across the public sector, we are capitalising on these conditions,
support for scaling-up the promotion of Scottish business abroad, and
exports providing new support for Scottish businesses to look to
international markets.
Scottish Development International (SDI), and its partners, will
boost its international activity with a focus on raising the
international aspirations of more Scottish businesses to trade
globally, a broader engagement with Scottish businesses and a
more intense focus on helping Scottish firms to understand
international market opportunities in their sector. This is
accompanied by a renewed strategy to target inward investment
opportunities where Scotland has a strong global position.
Tourism The interim evaluation has demonstrated the success of last year’s
Homecoming Scotland initiative in raising tourism revenue and
delivering a range of wider benefits to the Scottish economy.
Scotland outperformed the rest of the world in 2009. On average
global tourism declined by between 7 and 9% but in Scotland,
revenues remained relatively constant with only a 1.6% decline by
the third quarter. The movement in exchange rates continues to
make Scotland an attractive destination for overseas visitors to
Scotland and has also boosted the ‘staycation’ effect, encouraging
domestic UK visitors to Scotland. The Scottish Government will roll

out a series of further initiatives to ensure a legacy for
Homecoming.
Continuing the improvement of Scotland’s
planning system
Aligning to Since 2007, the Scottish Government has made a series of
support improvements to the planning system in Scotland, recognising its
development central importance to the Government Economic Strategy. Subject
to Parliamentary approval, planning fees will rise by 10% in April
2010 in order to ensure planning authorities are appropriately
resourced to contribute to economic recovery.
8 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
Continuing improvements to the planning system – including a
new brokerage role for the Chief Planner – will seek to ensure that
the public sector aligns its actions to increase the pace of decision-
making on development proposals.
Across the public sector we will look for opportunities to align
investment in new infrastructure with new development proposals
and identify where spare capacity in infrastructure could be used
to accommodate new development. A planning and economic
recovery summit in May will develop these issues further.
Access to finance
New evidence Contraction in the availability of finance lay at the heart of the
on access to recession, and improved access to finance will be a necessary
finance condition for a strong recovery. We have new insight into the
availability of finance for Scottish businesses, through the Scottish
Access to Finance Survey, that brings evidence to our future
activity. While conditions have eased and banks are more willing to
lend to viable business propositions, the survey suggests that
lower amounts of finance are being obtained and that the costs of
obtaining finance remain an issue for the majority of SMEs.

Implementing This year, we will continue to develop the Scottish Investment Bank
the SIB (SIB) so that it targets support to those businesses that can
contribute most to the Scottish economy in the future. We have
already allocated an additional £10 million towards the SIB through
new savings from across the Scottish Government. This reinforces
our commitment to build on the existing £150 million of resource
that already supports Scotland’s most innovative early stage
companies. More detail will follow in the next few months.
Supporting Lack of debt and equity financing has had a major impact on the
Urban viability of urban regeneration schemes throughout Scotland.
Regeneration To address this, we are working with our partners in the European
Investment Bank and the European Commission to create a
JESSICA Holding Fund. We anticipate that JESSICA will support
projects that can make an immediate impact; and support
economic recovery and growth in key regeneration areas.
Commercialisation
Scotland has long-held comparative advantages in its skills and
research base. The key to translating this into future economic
success is to stimulate the desire and ability in Scottish businesses
to commercialise these key intellectual assets.
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Innovation Through the innovation framework published last year, we will
support focus our innovation support on improving links between
businesses and the research base and encouraging more
businesses to create more competitive products and services. We
will deliver additional advisory support through the new innovation
support service with Scottish Enterprise (SE) and the partnership
between Highlands and Islands Enterprise (HIE) and the
Massachusetts Institute of Technology (MIT) which will help

businesses implement innovative opportunities.
Management We will also place a renewed focus over the coming months on
and leadership supporting and developing leadership and management skills in
skills Scottish businesses – to ensure managers have knowledge and
comprehension of the new opportunities in the post-recession
economy, and to support the development of their leadership skills
to implement new business strategies. The Council of Economic
Advisers, and others, have identified this as a priority area for the
improvement of productivity levels in Scotland. To achieve this our
Enterprise Agencies will focus on organisational development to
support companies to grow in scale, size and ambition.
Maintaining a strong labour market
A flexible In recent years, flexibility has become a hallmark of the Scottish
labour market labour market. Reductions in hours, reductions in salaries and
increased use of part-time working have meant that falls in
Scottish employment in this recession have been smaller than the
associated fall in Scotland’s total output. We have not witnessed,
for example, the large increases in unemployment seen in some EU
countries or in the United States.
There are ongoing challenges. The flexible labour market response
leaves spare capacity in the Scottish economy, and new growth may
not immediately be accompanied by new employment. Recession
has also had a disproportionate impact on younger people, and
some regions have seen larger employment impacts than others.
Summer 2010 Chapter four highlights the Scottish Government’s efforts to
pressures support the labour market through the critical period in summer
2010, as new entrants to the labour market emerge from Scottish
schools, colleges and higher education institutions.
We are managing this pressure by providing opportunities to
volunteer or retrain, and improving skills and vocational training

for young people. And we continue to address the ongoing labour
market pressures through our support for learning and skills across
the public sector more broadly.
Over the course of the coming year, we will continue to align
public sector activity towards employability and the maximisation
of employment opportunities. We will build on the recent success
of the Integrating Employment and Skills pilots – which have
brought together the services of Skills Development Scotland
(SDS) and Jobcentre Plus. Since the pilots began in February 2009,
over 1,200 unemployed people have received quick access to skills
assessments, careers advice and guidance from SDS. Plans are
now underway to roll out this service across Scotland before the
end of the year.
The need for a continued public sector stimulus
Uncertainty in The recent developments in the UK and Scottish labour markets
the Scottish highlight the uncertainty of the current economic conditions.
economy The UK Government’s decision to withdraw its fiscal stimulus
package in 2010 risks undermining the fragile early stages of our
recovery.
Above all, the latest unemployment figures demonstrate the
compelling case for a continued economic stimulus package in the
UK. Analysis by the International Monetary Fund (IMF) indicates
that the UK is the only country among the G7 to withdraw its
fiscal stimulus measures in 2010. We will continue to make the
case, supported by the economic evidence, for a further targeted
economic stimulus in the forthcoming UK Budget to help protect
jobs and businesses in Scotland.
10 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
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2. THE ECONOMY
The global economy emerged from the deepest, most synchronised downturn in recent
memory in the second half of 2009 with many advanced economies returning to
growth. The Scottish economy has performed broadly in line with the UK throughout
the downturn and the latest evidence suggests that the economy was close to
emerging from recession in the final quarter of 2009.
The recovery in the Scottish and global economies is expected to gain further
momentum in 2010, although significant risks still remain.
The global economy
Recovery in In response to the unprecedented actions by Governments and
the global central banks across the world, many economies emerged from
economy recession towards the end of 2009 with a return to growth in output.
The size and timing of the recovery phase has varied across
countries. The UK was the last G7 country to come out of
recession, following 0.3% growth in Q4 2009 after six consecutive
quarters of falling output. This contrasts with the US, which
recovered strongly in the second half of 2009 with growth of 0.6%
in Q3 2009 and 1.4% in Q4 2009. However, the sharpest
recoveries have been in Emerging and Developing economies,
particularly in Asia. These economies were not affected to the
same extent by the international financial crisis.
Output remains Despite the welcome return to growth, the level of output in many
below pre-crisis economies still remains significantly below pre-crisis levels. In the
levels UK and Germany, for example, output is around 6% below pre-
recession levels. Despite moving out of recession, the effects are
likely to still be felt by businesses and households.
86
88
90
92

94
96
98
100
102
104
US
UK
Japan
Germany
Q4-2009
Q3-2009
Q2-2009
Q1-2009
Q4-2008
Q3-2008
Q2-2008
Q1-2008
Q4-2007
Q3-2007
Q2-2007
Q1-2007
Q4-2006
Q3-2006
Q2-2006
Q1-2006
Q4-2005
Q3-2005
Q2-2005
Q1-2005

Quarterly GDP Index (Q2 2008=100)
Start of
Synchronised
Downturn
Source: OECD
12 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
Continued The rate of change in labour market conditions has also varied
weakening in considerably across countries, although the most recent figures
the labour indicate a general easing in the rate of increase in unemployment
market rates across most countries. The US has witnessed one of the
sharpest increases in unemployment, with the unemployment rate
more than doubling from 4.7% in November 2007 to 9.7% in
January 2010.
The increase in unemployment has not been as sharp in the Euro
Area, although this partly reflects a much higher base
unemployment rate. Although the Euro Area unemployment rate
in December 2009 was 10.0%, the increase has been from 7.2% in
March 2008. However, there has been considerable divergence
within the Euro Area, with German unemployment rates remaining
relatively unchanged at around 7.5%, and Spanish unemployment
more than doubling to 19.5%.
Volatile Global inflation has been particularly volatile in recent months,
inflation with temporary factors such as the rise in energy prices (relative to
the same point in the previous year) resulting in a sharp rise in
inflation. In the UK, the depreciation of sterling and the
subsequent upward effect this had on the price of imported goods
and services meant that inflation fell to a lesser extent throughout
2009 compared to other economies. The reversal of the VAT rate,
along with other temporary factors, has led to a sharp rise in
inflationary pressures in January 2010, with CPI rising to 3.5%.

These inflationary pressures are expected to fade in the coming
months as the excess capacity in the global economy created by
the recession is predicted to have a downward effect on price
pressures in the second half of 2010 and into 2011.
The Scottish economy
1
Scotland The Scottish economy has been in recession since the middle of
remains in 2008, although the rate of decline has eased substantially in
recession recent quarters following the sharp declines in Q4 2008 and Q1
2009. In Q3 2009 the Scottish economy contracted by 0.2%,
while the UK economy declined by 0.3% over the same period.
1 Details of the latest performance of the Scottish Economy are published quarterly in the Chief Economic Adviser’s “State of the Economy
Presentation”: />13
WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Although the UK entered recession a quarter earlier, following a
0.1% contraction in Q2 2008, the overall decline in output in
Scotland has been broadly in line with the UK with both
economies contracting by around 6% from their previous peaks.
The latest evidence from the Scottish business surveys suggest that
the Scottish economy is close to moving out of recession, with the
monthly PMI survey for January 2010 reporting that private sector
output in Scotland has grown for the seventh consecutive month.
Further rise in The rate of decline in Scottish labour markets conditions – which
unemployment coincided with the slowdown in economic conditions –
accelerated towards the end of 2009 following a period of
moderation in the middle of the year. The Scottish unemployment
rate rose by 0.4 percentage points to 7.6% in Q4 2009. Over the
year to Q4 2009 Scottish unemployment levels increased by
65,000. There was a corresponding decline in the Scottish
employment rate which fell to 73.5% in Q4 2009, and a fall in

working age employment of 51,000 over the year.
71
72
73
74
75
76
77
78
UK
Scotland
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Percent
Scottish & UK Employment Rate
Scottish & UK GDP Growth
(Quarter-on-Quarter)
Percentage Change on Previous Quarter
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2005
Q1

2005
Q2
2005
Q3
2005
Q4
2006
Q1
2006
Q2
2006
Q3
2006
Q4
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4

2009
Q1
2009
Q2
2009
Q3
2009
Q4
Scotland UK
14 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
Impact on industry sectors
Broad-based The recession has impacted on most sectors of the Scottish
decline in economy, with the majority experiencing a decline in output.
output The sectors, which have experienced the largest falls in output
have been the manufacturing and construction sectors, where
output has declined by 11.3% and 13.1% respectively since the
Scottish economy entered recession – broadly matching the scale
of decline witnessed in the UK as a whole. The service sector has
experienced a less marked decline – 4.8% since the start of the
recession. There has been an easing in the rate of decline in
output across most sectors in Q3 2009, with a return to growth in
the production sector where output increased by 0.9% over the
quarter.
The changes in employee jobs by sector have broadly followed the
pattern of the decline in output. The most rapid rates of decline
have been in the manufacturing and construction sectors, falling
by 6.3% and 7.9% over the year to September 2009 respectively,
in line with reductions at the UK level. The largest falls in the
number of employee jobs were in Distribution, Transport, Finance
and Business Services (down 34,000 over the year), and

Manufacturing (down 14,000).
-10
-8
-6
-4
-2
0
2
Education, Health,
Public Admin
& Other Services
Dist, Transport,
Finance &
Business Services
ConstructionManufacturingMining, Energy &
Water Supplies
Industry
All Jobs
(seasonally adj)
Change in Employee Jobs in Scotland
September 2008 to September 2009
% Change
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Impacts by age group and occupation
Rise in youth The recession has had a disproportionate effect on certain groups.
unemployment The young, identified as those aged 16-24, tend to be amongst
the first to experience deterioration in labour market conditions as
employment opportunities become more limited. Over the year to
the three-month period October-December 2009 the ILO

unemployment rate for the 16-24 age group has increased from
13.1% to 17.1%, accounting for around a quarter of the total
increase in ILO unemployment over this period. Despite this
increase Scotland still maintains the lowest youth unemployment
rate of the UK countries, with the UK average for the same period
standing at 18.9%.
Rise in The impacts have also varied by occupation. The latest claimant
unemployment count data – which is based on Jobseeker’s Allowance records and
for low-skilled is reported on a monthly basis – show that in January 2010 the
occupations claimant count unemployment rate was highest amongst the
lower skilled occupational groups, with the highest rates in the
Elementary Occupations (15.6%), Sales and customer service
occupations (10.7%), and Process, Plant & Machine Operatives
(9.1%). However, over the year, the largest percentage increase in
claimant count unemployment levels has occurred in some of the
higher skilled occupations. Professional occupations increased by
55% and Associated Professional and Technical Occupations
increased by 40%, although these increases reflect relatively low
starting positions.
Unemployment Rate (%)
ILO Unemployment Rate (%) by Age Group, Scotland
13.1
3.9
2.9
17.1
5.9
5.2
0.0
2.0
4.0

6.0
8.0
10.0
12.0
14.0
16.0
18.0
16-24 25-49 50+
2008 2009
Source: LFS, Oct-Dec quarter, non-
seasonally adjusted
16 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
Impact on the regions of Scotland
All local The claimant count data set provides an indication of the relative
authorities nature of the labour market adjustment across local authority
affected areas. Every Scottish region has experienced a rise in the number
of people claiming unemployment benefit, with the rate of
increase particularly sharp in areas such as East Renfrewshire,
Aberdeen City, and Midlothian. However, the higher rate of
increase in these areas generally reflects a relatively low starting
position.
The areas where pre-recession unemployment levels were above
the national average have also experienced increases in the
number of people on the claimant count. Data covering the period
to January 2010 shows that the highest claimant count
unemployment rates were in the following areas: North Ayrshire;
West Dunbartonshire; Glasgow City; and East Ayrshire.
Future prospects for the Scottish economy
Accelerated The pace of the global recovery accelerated towards the end of
recovery 2009, driven by emerging and developing countries recording

in 2010 strong rates of growth. With every G7 country now out of
recession, the prospects for 2010 have improved. This is reflected
in the latest forecasts from the International Monetary Fund (IMF),
published in January 2010, which predict a stronger global
recovery compared to their previous forecasts back in October
2009.
Despite this, the IMF predict the recovery to be at different speeds
in various parts of the global economy. Emerging and Developing
countries are still expected to drive global growth in the coming
years, although the IMF now predict a stronger recovery for
advanced economies.
The consensus forecast for the UK is of modest growth in 2010 of
around 1% to 1.5%, with the recovery gaining further momentum
in 2011. However, significant risks remain, including restrictive
credit conditions and the withdrawal of fiscal stimulus measures
which will act to constrain recovery.
The latest evidence suggests that the Scottish economy was close
to emerging from recession in the final quarter of 2009. The
recovery is expected to gather pace in 2010, as business surveys
report an improved outlook for the first half of the year. Like the
UK, the recovery is expected to be modest, with independent
forecasts suggesting growth of between 0.3% to 1.0% in 2010 –
considerably below average rates of growth in the years before the
recession.
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Relatively modest economic growth rates are likely to result in
labour market conditions remaining weak, even as growth returns
to the economy. For example, the latest claimant count data for
both Scotland and the UK showed a sharp increase in the number

of people claiming Jobseekers Allowance in January. This, along
with evidence on employment intentions in the private sector from
the Scottish PMI survey data in January, suggests that we must
prepare for a potential further deterioration in labour market
conditions in the coming months.
18 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
3. INVESTING IN INNOVATION AND INDUSTRIES OF
THE FUTURE
One of the major impacts of recession is to reveal the extent of imbalance within the
global economy. As these imbalances are corrected, we are likely to see the
repositioning of economies within the global economy, and restructuring of industrial
sectors within these economies. In Scotland, there will be new competitive pressures
to alter the pattern of trade, sector mix, and spatial pattern of economic activity. This
dynamic environment creates exciting opportunities for Scotland to exploit its
comparative advantages. As we emerge from recession, the restructuring in the
Scottish economy can accelerate the productivity improvements targeted in the
Government Economic Strategy.
Our focus is on alignment across the public sector to create a flexible, supportive
business environment. We have placed a special focus on the development of the Key
Sectors, which utilise Scotland’s competitive assets and have the potential to drive
sustainable economic growth in the longer term. Over the course of the coming
months, we will maintain close links with the Scottish business community to inform
our approach.
The low carbon economy
Climate change will have a major influence over the long-term
economic growth and stability of the world economy. Scotland has
already taken a lead with the most ambitious emission reduction
targets in the world. It is an economic imperative that we now
support these efforts with a move to a low carbon economy. This
also offers perhaps the best opportunity to develop new industries

in Scotland – exploiting Scotland’s natural and intellectual assets.
The 2020 A new 2020 Delivery Group was established in December 2009 to
Delivery Group ensure that all sectors of Scotland’s economy and civic society
contribute fully to achieving the Climate Change Delivery Plan
which includes the target of a 42% reduction in emissions over the
next decade.
The Group has a wide membership from both the public and
private sectors and has the remit to provide strong and visible
leadership to all sectors of Scotland and inspire them to do more
to reduce carbon emissions through innovation, partnership and
collaboration.
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WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER
Towards a Low Carbon Economy for Scotland: Discussion
Paper
Scotland must adapt to the uncertain, yet inevitable physical and
economic consequences of climate change – impacts which are
already unavoidable.
This transition presents a range of low carbon global market
opportunities, not just in the renewables industry but in every
sector and business across Scotland. As we emerge from
recession, we have an opportunity to develop new, low carbon
and environmental products and services to help accelerate
economic recovery in the short term as well as drive long-term
sustainable economic growth. These include exploiting new
market opportunities in the low carbon environmental goods and
services sector as well as ensuring that existing sectors and
businesses are able to adapt effectively to a changing climate.
The Scottish Government will shortly publish a low carbon
discussion document, which aims to raise awareness of the

economic opportunities and challenges that Scotland faces in the
transition to low carbon. Together, with our key partners, we will
draw on the responses to this consultation to shape a Low Carbon
Strategy for publication later this year. To enable an effective
transition to a low carbon economy the discussion paper will
explore:
■ the strategic priorities and mechanisms to help Scotland realise
the scale of potential market opportunities in a global context;
■ the challenges and opportunities of helping existing firms and
industries adapt to a changing climate;
■ how to increase the support in innovation, investment and skills
necessary to drive change;
■ the need to assist behavioural changes among firms and
individuals; and
■ the need for a strategic and coherent approach across the public
sector, aligned with the low carbon market opportunities with
the greatest economic potential for Scotland.
Beauly-Denny The Beauly to Denny upgrade is the most significant and important
electricity infrastructure reinforcement project in Scotland for a
generation. This development will help unlock Scotland’s onshore
and offshore green energy potential. The improved transmission
capacity the development will bring is crucial to help Scotland
meet our 2020 renewable electricity demand targets, and enable
Scotland to export renewable energy to the rest of the UK and
Europe.
Action of Energy efficiency is the most cost effective way to achieve
energy emissions savings. Measures to improve Scotland’s energy use will
efficiency be detailed in our Energy Efficiency Action Plan which will be
published in the Spring.
Carbon Capture Our vision is for Scotland to become a leader in the

and Storage demonstration and deployment of Carbon Capture and Storage
(CCS) technology, utilising Scotland’s advantages and strengths.
We will shortly publish a CCS roadmap and we are aiming to see
the development of a number of CCS demonstration and research
projects in Scotland. The Scottish Government was the largest
contributor to the Scottish CCS Joint Study, launched by the First
Minister in May 2009, highlighting the offshore potential of the
North Sea Scottish sector to store emissions for the next 200 years.
A successor to this project has since been developed and is due to
be completed by the end of 2010.
National Our National Renewable Infrastructure Plan sets out a framework
Renewables for action by the Scottish Government, agencies, and partners to
Infrastructure ensure at least 20% of total Scottish energy use comes from
Plan – offshore renewable sources by 2020. Scotland is leading the world in the
infrastructure development of deep-water offshore wind-farm deployment and
construction and has the potential to do the same in marine and
tidal energy generation. The scale of opportunity is enormous.
In order to realise the potential of its natural resources, supply
chain and innovation strengths, it is vital that Scotland develops its
ports and adjacent manufacturing hubs in tandem. Stage one of
the National Renewables Infrastructure Plan, launched in February,
identifies sites required for large-scale infrastructure investment in
the offshore wind, wave and tidal sectors. Not only will these help
harness economic opportunities in relation to Scottish offshore
developments but they will also enable Scotland’s renewables
industry to capture a share of the over £100 billion investment in
wider UK and North Sea wind farms. Scottish Enterprise (SE) and
Highlands and Islands Enterprise (HIE) will now work more
intensively with key port owners, the Crown Estate, renewable
energy developers and the Scottish Government to develop robust

investment plans.
As part of this work, discussions have already taken place with the
European Investment Bank (EIB) on the opportunities for the EIB to
become involved. The Scottish Government also intends to host a
large-scale finance conference in Scotland later in the summer,
which will stimulate new investment models and ideas for the
funding of offshore infrastructure and Scotland’s low carbon
transition more widely.
20 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY
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Power The Power Networks Demonstration Centre (PNDC) at
Networks Cumbernauld is expected to play a central role in accelerating the
Demonstration deployment of emerging smart grid technologies and enabling the
Centre expansion of Scotland’s renewable energy industry.
A collaborative venture between the University of Strathclyde, SE,
Scottish Power and Scottish and Southern Energy, the PNDC will
provide a world class facility to support the development and
validation of distributed electricity generation technologies. SE has
approved a £7 million grant to the University of Strathclyde to
support the capital costs of establishing the PNDC.
Key objectives for the PNDC are:
■ to establish a facility that will overcome the safety, operational
and capacity issues associated with the increasing amount of
renewable and distributed energy connected to the grid;
■ to facilitate the faster development and adoption of new
technologies and practices by enabling rigorous testing in
realistic environments;
■ to establish a facility that is an ideal platform and proving
ground for system integrators, manufacturers, network

operators and researchers alike; and
■ to provide opportunities for industry to engage with academia
and major users of technologies across various sectors.
The Centre will be owned and managed by the University of
Strathclyde, under the direction of member organisations.
Members will pay an annual membership fee in return for services
including access to the ‘live’ grid environment, laboratory,
equipment and expert staff for research, development and
demonstration projects. The PNDC will help drive entrepreneurial
activity in this advanced technology sector with a global reach. It
will offer the opportunity for creating an R&D cluster, provide a
compelling proposition for attracting high quality jobs to Scotland
and opportunities for the development of skilled engineers.
Environmental SE, HlE, the Scottish Environmental Protection Agency (SEPA) and
and clean the Scottish Funding Council (SFC) launched an action plan in
technologies Autumn 2009 for the development of environmental and clean
technologies (ECT). There is now cross public-sector alignment, in
partnership with the business and the research communities to
develop a strategy for ECT that identifies global market
opportunities within five sub-sectors:
■ Sustainable transport;
■ Building technologies;
■ Water and waste water treatment;
■ Recovery and recycling; and
■ Environmental monitoring and instrumentation.
The ECT strategy will integrate with the development of a broader
low carbon strategy for Scotland and provide a framework to align
public sector support behind the areas of greatest potential
economic opportunity.
Scotland’s Key Sectors

The Scottish Government is working across the public sector to
support the development of the key sectors identified in the
Government Economic Strategy (tourism, creative industries,
energy, financial and business services, food and drink, life
sciences and universities). These sectors have the potential to drive
sustainable growth in the long-term through their exploitation of
Scotland’s key assets.
Tourism – the Tourism is among the largest contributors to the Scottish economy.
legacy of In 2008, total tourist expenditure in Scotland was £4 billion.
Homecoming The sector is traditionally sensitive to global economic fluctuations:
movements in the exchange rate or in the performance of a
foreign economy can directly impact on visitor numbers. Scotland’s
appeal is broader than many other destinations, however, drawing
visitors from a large number of markets. The Scottish tourism
sector is generally resilient to a fall in visitors from any one country
and VisitScotland has the flexibility to focus on target markets as
circumstances change.
Despite a particularly difficult trading period for the sector, the
interim evaluation of Homecoming in 2009 has demonstrated its
success in generating additional returns for the Scottish
economy. Plans to build on the success of Homecoming are now
underway, with the establishment of a Ministerial task force
over 2009, the single theme of Homecoming helped to align
every sector, business and organisation towards the more
consistent promotion of Scotland globally. We will continue this
approach and sustain the momentum built during 2009. We will
focus on a variety of Scotland’s assets and from May 2010 to
April 2011 there will be a national celebration focusing on Food
and drink, with plans for further themed years in the promotion
of Scotland.

To capitalise on the ‘staycation’ effect that was clearly visible
during 2009, VisitScotland has realigned its marketing activity and
established a dedicated Scotland Marketing team which will be
charged with encouraging those living in Scotland to visit or
holiday in their country more. A key element of this activity will be
around promoting the day trip market and converting day trips
into overnight stays. Visit Scotland recently launched its new
£1.25 million European marketing campaign for 2010 based on a
series of Scots people who represent the friendly face across the
tourism industry.
22 THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY