NICOLA Sturgeon has downplayed a key recommendation of the SNP’s Growth Commission on the eve of party members debating it.
The First Minister warned against becoming “fixated” on a deficit reduction target as it could be “counterproductive”, and said a spending boost may be better for the economy.
Ms Sturgeon was speaking after the latest Government Expenditure & Revenue Scotland (GERS) figures put Scotland’s deficit at 7.9 per cent of GDP in 2017/18.
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The difference between Scotland’s tax income and public spending was the highest in Europe, and one of the highest in the developed world.
A key plank of the Growth Commission, the revised economic blueprint for independence, was to “target a deficit value of below 3 per cent within 5 to 10 years” of a Yes vote.
This was to be achieved by keeping an extremely tight rein on public spending.
The idea angered many on the Left of the independence movement and was described as a continuation of Tory-style austerity by the Institute for Fiscal Studies.
There was also criticism the proposed low levels of spending growth failed to factor in increasing demand for services, the ageing population and health care inflation costs.
SNP members are due to start debating the Commission’s report this weekend in the first of three National Assemblies, although there is no formal debate at the October conference.
Asked about the Growth Commission’s plan on swift deficit reduction, Ms Sturgeon said: “The Growth Commission was very clear that, yes, as any country would want to do, we need to get deficit and debt to sustainable levels and I agree that that is important.
“But it also made very clear.. that austerity was counterproductive.
“The second point it makes, that I very strongly agree with, is that fiscal rules should not become counter-productive.
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“So if actually what the economy needs is stimulus to get the economy growing faster, that’s what should take priority."
She said the 3 per cent deficit target was “a reasonable one”, but added: “We want to be in that position as quickly as possible but [without] a target that you become so fixated on that it actually becomes counterproductive, which is the situation the UK has been in for the last decade.”
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