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Scottish economy under pressure

A report from the Strathclyde University has poured scorn on suggestions that the Scottish economy will bounce back quicker than others in the UK. The report suggests that at the very best there will be zero economic growth in 2010 in Scotland and indeed the spectre of a possible return to recession has been mentioned. So why will Scotland lag the rest of the UK?

One of the main issues affecting Scotland seems to be the massive exposure to public services and the massive expense which this has incurred for taxpayers over the years. Despite promises by various parties who have taken control of the Scottish parliament there has been little or no reduction in headcount and indeed the cost of public services in Scotland continues to rise year on year. This in itself is detrimental to the health of the Scottish economy in the current climate but when you also take into account the ever-growing pension fund liability for taxpayers, with regards to public sector pensions, the cost begins to grow even more.

The issue of the banking sector in Scotland, which for many years was a central point of the UK banking system, is also causing problems with the likes of Royal Bank of Scotland and Bank of Scotland under pressure. An inability for Scottish-based banks to lend to local businesses and to indeed offer individuals funding for mortgages and loans is also likely to worsen the recovery lag for the Scottish economy.

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