10 October 2005

More dodgy economics commentaries

Yesterday, Scotland on Sunday made something of a song and dance about the preponderance of the public sector in Scotland's economy:
"THE astonishing extent to which state spending is propping up Scotland's economy is laid bare in new figures which suggest the ballooning public sector is strangling wealth creation. "
[Not too sure how state spending can be simultaneously propping up the economy and strangling wealth creation, but let that one stick to the wall.]
"The findings show that in some areas, three-quarters of the local economy is made up solely of the billions of pounds pumped in by the government. Such is the size of the public sector in these areas, business chiefs and economists fear it is swallowing up private enterprise, hoovering up talented workers and making it nearly impossible for companies to prosper.
The findings shed fresh light on Scotland's chronic dependency culture - in which the economy is becoming increasingly reliant upon state handouts to provide wages for the ever rising army of public sector workers.
It also provides a further explanation for why the country's growth remains at a laggardly 2% - compared with the UK's 2.7%. "

But today, The Herald appears to attribute the strength of recent private sector growth to the size of that public sector (here):
"Scotland was the second-top economic performer out of 12 areas of the UK in September, according to a key survey published today. Its consistently good showing over the third quarter was reflected in the fact that it is also second over the three months to September. Over both one and three months, it is behind only Wales...
Andrew McLaughlin, chief economist at Royal Bank of Scotland, believed this ... was consistent with growth around the longer-term trend rate for the Scottish economy of between 1.8% and 2%. He said: "The UK data that we have seen over the past couple of weeks, it looks as if we may be passing through the trough of the business cycle at a UK level. The Scottish PMI numbers suggest
Scotland is continuing to perform a little better than that. It is continuing to grow around its trend rate."Citing one possible reason for Scotland's relatively good performance, McLaughlin added: "I think, when you pass through the trough of the business cycle, having a relatively bigger public (sector) share of output is a support to business services in Scotland."

What is a simple blogger to make of this? Blowed if I know...

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