WHO among us has not been captivated by the baking expert Paul Hollywood’s BBC series on bread-making? The flying flour, the effortless mixing, the deft kneading, the insouciant addition of exotic ingredients – and the beguiling smile to the camera: many, I suspect, found it hypnotic to watch and the end product irresistible. But not me. Some years ago I stopped for afternoon tea by a charming café on the bonny banks of Loch Venachar. The scones were stupendous, the tallest I had ever seen. They rose from the plate like billowing chef’s hats. These were scones to die for. And I resolved to bake some. All I thought would be required to achieve that remarkable scone height was extra yeast. And so, one afternoon, I embarked on a Paul Hollywood adventure. I did not have his 12ft table, nor the deft touch with kneading, nor the industrial-sized oven. But I did manage to use every available kitchen utensil, cover most of the kitchen with flour and add copious amounts of yeast to achieve the desired Loch Venachar effect. I should have spotted, when moving the scones to the top grill for browning off, that something was amiss. Smoke began seeping from the cooker. It was not until long tongues of flame were shooting out of the oven that I surmised my “plan A” had gone awry. The next day, when I had finished scraping the blackened remains of the exploding scones off the inside of the cooker, I surmised that I may have gone over the top with the yeast. These things, as I explained to my wife, grieving over the permanent burn marks and the acrid smell of burnt scones that lingered for weeks, can be difficult to judge. When pondering the latest calls on the Bank of England for yet more quantitative easing, I often think of my exploding scones. Adding more money works just like yeast. Mix it into the economy and it makes things expand. But how much more yeast to add? When little seems to be happening, as now, what a temptation it is to sprinkle in just a little more. Or an extra handful, just to be sure. The Bank has already added £375 billion of “yeast”. Yet you can never be sure how many more billions to add without risking a catastrophic burning as inflation takes off and flames burst out of the cooker. Today, nothing seems to be happening. The yeast should be ample but the scones aren’t rising. Indeed, pessimism about our economic prospects seems without limit. Bank lending has barely picked up. Growth forecasts are routinely missed. The only thing rising is that deadly total of debt. But you’ll understand why I side with those cautious about adding more yeast. Looking deeper into those gloomy assessments of a stagnant economy, I’m not sure the scones are as lifeless as they seem. I suspect official data may be underestimating the signs of life. And both at UK level and here in Scotland we are not paying enough attention to the volume of start-up activity now evident. This week the British Chambers of Commerce – which has seldom pulled its punches in urging more government activism – delivered an upbeat assessment of our prospects, arguing that a strong performance by service industries during the first quarter has kept the economy growing. It expects the UK economy will record “positive but subdued growth” in 2013. David Kern, the group’s chief economist, said the results of its survey suggested the economy had continued to grow in the first three months of 2013 – contrary, he added, to the picture of the economy being painted by official figures. “The survey reinforces our assessment that recent [official] gross domestic product figures have exaggerated the weakness of the UK economy and the volatility in output,” he said. Here, the latest Business Monitor from the Bank of Scotland, out today, shows a marginal improvement. In the three months ending 29 February, the overall net balance of turnover for firms in the production sector was up slightly, while service businesses showed a larger improvement. The latest news from the Federation of Small Businesses Scotland showed Scottish small business confidence on the increase in the first quarter of 2013. Business investment intentions are on the increase and are now higher than the equivalent UK figure for the first time in a year. The domestic economy has put in a stronger performance than the doomsayers admit, building on an often overlooked resilience since 2009. The service sector has risen each year since 2010, with gains in the motor trade, wholesaling, publishing, audio-visual and broadcasting. The telecommunications sector is up by 6.3 per cent; computer programming and consultancy by 14.6 per cent; legal, accountancy and architecture by 9.2 per cent; and other professional and scientific services by 17.4 per cent. Meanwhile, the number of people in work is 3.3 per cent higher than its 2009 recession low point, and 0.7 per cent above pre-crisis levels. Service sector employment is 722,000 up on the 2009 low and 490,000 higher than at the start of 2008 when recession struck. Arguably most striking of all has been the continuing strength of new business start-ups. So far this year, 123,571 new businesses have been registered, according to the StartUp Britain website. New business launches are running at the rate of more than 10,000 a week. It is an astonishing testimony to the fortitude and resilience at the heart of the economy, despite the many reasons for discouragement and despair. This year the StartUp campaign hopes to see 500,000 businesses started in the UK. Sadly, in Scotland we do not have comprehensive or timely figures on business start-ups. New business bank account data does not cover all the banks in Scotland, and there is no central pulling together of data that would give us an accurate picture of start-up activity. We badly lack a focal point where the latest figures are presented and which would give encouragement and support for our entrepreneurs. What we do know, however, is that small and medium-sized enterprises (SMEs) now account for 99 per cent of all Scottish businesses and for more than half of all private sector employment – underlining the pivotal role of small firms in our economy and communities. In 2011, the latest year for which statistics are available, business registrations stood at an all-time record. And further progress is evident. The Edinburgh Economy Watch, released yesterday, shows business incorporations in the city up 13.7 per cent in the three months to February compared with the same period last year, and that Business Gateway start-up figures for February were double that recorded in January. Overall growth is still glacial, but there are powerful growth ingredients already in the mix. We should go easy on that yeast.
