PLEASE permit me to commence with a little rant about the move on the 50p tax rate at last week's Budget.

The backcloth to the rant is two assumptions regarding Chancellor George Osborne's criteria for tax changes.

First, he believes in providing incentives – for people to base their businesses here and for people to strive to be successful in their work; to succeed for their sake and for that of the wider economy. Second, as proclaimed in his Budget speech, he finds "aggressive tax avoidance" to be "morally repugnant".

The reduction in the 50p rate, alongside the wider implications of tax changes in the Budget, does not stack up against these criteria.

The tax take from the 50p rate has been way below expectation. People managed to avoid it, in the first year, by booking income early – before the tax hike – and hence having lower income in the year the rate rose to 50p. That may not be unduly "aggressive" but it is – perfectly legal – tax avoidance.

Once the 50p rate has been in for 12 months or more, that particular dodge will not work. So the take should be rising.

However, that will not happen as it might have in 2012/13, because the rate is going down next year to 45p. So these same folk who brought income forward will doubtless now delay booking income until 2013/14 and avoid 5p in the pound. Thanks for the forewarning, Mr O.

What about incentives? Well, one effect of the Budget is to drag very large numbers of folks into the 40p tax band. Logically, I would have thought the adverse effect on the incentives of this substantially larger group would be expected to be orders of magnitude greater than any positive incentive effect from reducing the top rate to 45p for a much smaller group.

Perhaps I am missing something here, but the logic escapes me. Rant over – and I have not even mentioned equity effects or pensioners.

Now back to the economy: the latest data have been none too encouraging. The revised Office for National Statistics (ONS) estimate for UK GDP in the fourth quarter of 2011 is a decline of 0.3%, down from a first estimate of - 0.2%. Growth in 2011 as a whole is now estimated at a miserly 0.5%.

Then we had a release from the influential Organisation for Economic Co-operation and Development (OECD) estimating a UK GDP decline in Q1 2012 – albeit of only 0.1%. This forecast will be based on the latest available data and surveys, etc. – it will be close to correct if not precisely on the button.

If the official ONS data confirm this OECD estimate, then the UK will be back in formal recession, having experienced two successive quarters of negative growth. But the circumstances are different from the last time we slipped into recession, as the credit crunch struck.

Then the only way was down – and the only questions how far we would fall and for how long. Now the expectation has to be that this will be a temporary phenomenon – I shall shun the word "blip" given previous connotations – and that there will be some positive growth in the UK and in Scotland as 2012 progresses.

The Fraser of Allander forecast for Scotland for 2012 is growth at 0.4%. The formal UK forecast from the Budget was growth of a little more than that but still below 1%. The optimistic outlook is for very subdued growth through the rest of 2012, with the hope – and for many the fingers-crossed expectation – that the pace of growth will accelerate a touch through 2013 and 2014.

It had better, because UK GDP remains 3.6% below the pre-recession peak and Scottish GDP 3.3% shy of that previous peak.

At the risk of sounding like a cracked record (for those who can remember records), I still see encouraging higher private sector investment, especially innovative investment, as a top priority for Scotland.

I do worry that the banking market here is very thin, especially for SMEs, and that RBS and Lloyds/HBOS are focusing on balance sheet repair while Clydesdale certainly have no aim to enhance lending.

In his recent letter to Danny Alexander at the Treasury, John Swinney pointed out that lending under the much vaunted "Project Merlin" not only missed the target set for and by the banks, but missed by comparatively much more north of the Border than for the UK as a whole.

Only a feeble 4.6% of that lending went to Scottish SMEs. That was, as Mr Swinney pointed out, certainly not due to a shortage of demand for funds.

The supply side has to be the problem – too few banks active here and those that are seem to be too risk averse and uninterested in this type of activity. Moves to lubricate the links between SMEs and the existing banks, while encouraging new entrants into this field, look like key priorities.

l Jeremy Peat is director of the David Hume Institute