SCOTLAND could suffer several high street casualties in 2009 as the economy continues to shrink, one of the nation's leading business organisations warned last night.
The Scottish Council for Development and Industry issued the warning as retailers up and down the country slashed prices in a post-Christmas bid to attract customers and stave off the threat of bankruptcy.
Lesley Sawyers, the SCDI chief ex
ecutive, said: "2009 will be an incredibly difficult year for Scotland and the Scottish economy. Economic indicators all point to the first year of negative growth in Scotland since 1980, and it is likely there will be more high profile casualties of the economic slowdown."
Sawyers called on the UK Government to cut interest rates early in the new year and to increase the amount of cash in circulation by printing more money to boost spending. She also said the Scottish Government should drop its contentious plan to replace council tax with a local income tax.
The SCDI, an independent, non-political, not-for-profit organisation, added its voice to the chorus of opposition to the local income tax. Labour has argued that the change will make Scotland the highest taxed part of the UK – the last thing the country needs in the economic downturn. The start-up costs have been estimated at £60m plus an additional £18m in annual costs.
Sawyers said: "Business needs certainty at this time of ebbing confidence, and there couldn't be a worse time to introduce a change like the local income tax.
"We hope the Scottish Government will be brave enough to drop their proposal, and work with SCDI and others to develop alternative approaches to modernising local taxation."
The threat of harder financial times saw bargain-hunters flock to the shops yesterday as prices were slashed by up to 90%. Demand was so intense that online shoppers even faced waiting times to get on to retail websites. Experts said many consumers appeared to be going on spending sprees in anticipation of cutting back in the new year.
Sawyers said governments would need to work together with industry to limit the impact of the financial crisis.
"We need to rewrite the rule book in the private and public sector to ensure we capitalise on every opportunity to maximise the impact of every enterprise scheme, loan or grant, and do more to support local business and companies."
She called for continued investment in people and skills to help ensure that "we are first out of the starting blocks" when the economy improves.
She also urged Holyrood ministers to invest in recently announced transport projects, which include a new Forth crossing and improvements to the road and rail network.
Observers were sceptical about how far-reaching plans unveiled earlier this month would be financed. A new £2.3bn Forth crossing was announced. So were plans to dual the A9 from Perth to Inverness, electrify Scottish railways and increase the frequency of the Edinburgh-Glasgow train service.
Scottish ministers have approached the Treasury for capital investment, but have yet to receive a response.
