Jeremy Peat: 'We are at the most critical time since the end of the last war'

But as we edge towards a marginally more optimistic outlook on the Covid front, the time is ripe to consider the best way forward for our economy –how best to propel it steadily back upwards from the depths to which it has descended.

Of course uncertainties regarding the future of the pandemic – in Scotland and elsewhere – remain.

A cautious approach is still essential, but we should be seeing, and via governments supporting, a start to business and employment recovery. That short-term progress needs to be set alongside detailed and constructive consideration as to how we can move in the months ahead to accelerating recovery, with a focus on longer-term prosperity and achieving a more equal and progressive society.

One, perhaps the, key element of seeking the best way forward in Scotland was supposed to be kick-started by last week’s report from the ‘Advisory Group on Economic Recovery’. Given the stellar quality of the group brought together under Benny Higgins this report was much anticipated.

However, the report was not well received by a wide variety of commentators. Sadly this disappointment is justified. The report is strong on aspiration but weak on specific propositions.

The authors would find it nigh on impossible to set out in a handful of bullet points the key action points that they wish to flow from their analysis.

It certainly does not help to determine how business can be encouraged to get up and running. This will be an essential first step towards generating the momentum in our economy that will, in turn, create employment and income opportunities to support consumer demand; and in due course permit a much-needed rebalancing.

The day after the Higgins report was published we had a lengthy paper on post-Covid fiscal policy from the Scottish Government. This was strong on what the UK Government should do for the sake of Scotland’s fiscal position and prospects. But again we lacked any proposals on what the Scottish Government could and should do using devolved powers.

The UK Government has thus far failed to set a more positive tone. The Prime Minister’s economic pronouncements last week were strong on bluster and rhetoric but, as the Fraser of Allander Institute has pointed out, "there was little in the statement that was new. Most of the spending announced is an acceleration of planned spend".

In their earlier paper, the Scottish Government called for a UK fiscal stimulus amounting to four per cent of gross domestic product. The Roosevelt New Deal which Prime Minister Boris Johnson suggested as a comparator to his plans amounted to 5% to 7% of GDP per annum over a number of years. The Johnson pronouncement came to some 0.25% of GDP – essentially chicken feed in this context.

Also the Johnson plans focus on capital spend – with so-called "shovel-ready" projects to enhance infrastructure. Nobody would disagree with the need for improved infrastructure across Scotland and the rest of the UK, including the physical and the virtual. But long-term measures inevitably yield long-term benefits rather than any significant short-term impact.

What we desperately need now is a combination of shorter-term and longer-term measures. We need to know how a dramatic spike in unemployment is going to be avoided when the furloughing scheme is run down. We need to know how an acceleration of business failures across all sectors is to be avoided as businesses face debt-servicing issues before their revenue streams are close to full recovery and while balance sheets remain in a dire state.

We should learn more from the mini-Budget due from the Chancellor this week. We need to know specifics from the UK and Scottish governments. What support is to be provided to those, mainly younger, less-skilled and otherwise disadvantaged, who do lose their jobs effectively through no fault of their own?

Let’s get specific on job-support measures for an extended period to benefit businesses and households; on selective easing of the costs of repaying loans taken out in extremis; on business rate relief for the worst-hit sectors; on training and apprenticeship opportunities for the newly unemployed, subject to the living wage. Measures such as these will be needed through the remainder of this year if we are to minimise the depth and duration of the recession and the extent and again duration of the spike in unemployment.

Those reports and pronouncements we have seen thus far were not sufficient at this critical juncture. There are other ideas around which merit attention – such as those from Andrew Wilson and Alan McFarlane.

There is a wealth of excellent economic analysis from the Fraser institute, Professor Ronald MacDonald and the like.

But the critical gap is on policies aimed at helping business through the next few months, keeping unemployment as low as is feasible and supporting constructively those losing their jobs so that businesses and households see a path forward to prosperity. Yes we need better infrastructure as well – schools, hospitals, roads, rail, the internet, etc. Yes we need to look at means of re-balancing our economy and our society. Early action is desirable on these fronts as well – but the key is to prevent disaster in the weeks and months ahead. We are at the most critical time since the end of the last war.