IT is often somewhat exasperating to listen to politicians talk about the economy but Alister Jack really, really managed to rile over the weekend with some glib stuff about Scotland’s performance relative to England.
Obviously, politicians try to put forward a narrative to support their particular party’s ideology. And the Scottish Secretary certainly appeared keen to talk the Scottish economy down in the context of his declaration, subsequently repeated by his leader Boris Johnson, that Nicola Sturgeon would not be granted permission for another independence referendum.
The crux of Mr Jack’s argument, during his appearance on the BBC's Politics Scotland programme, went as follows: “I think we’ve had 10 years where Scotland has been in discussion or having referendums. It hasn’t done our economy any good. We’re slower than the English economy. It’s not good for jobs.” This is a statement well, well worth dissecting.
Mr Jack, apparently for political reasons in the context of the independence debate, seems keen to focus on Scotland over the last 10 years.
He might remember, or he may not, that, for many years before the global financial crisis that got under way in earnest in 2008, Scotland’s long-term annual average growth rate was put at about two per cent. The corresponding UK trend rate was about 2.5%.
It is indeed the case that 2.5% is greater than 2%. However, these were the approximate respective trend growth rates over a very long period before there was any much talk of independence, with this relative situation stretching back to pre-devolution days. So this had nothing to do over all these years with talk of independence referendums.
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We should also bear in mind, in the context of the Scottish versus UK as a whole trend rates, the extent to which London and south-east England drive the overall growth.
Mr Jack did not get into the impact of the protracted global oil and gas sector downturn, caused by a plunge in crude prices that began in the second half of 2014, on the Scottish economy over several years. This had a big knock-on impact on Scotland’s onshore economy, something of major relevance if you want to contemplate relative performance over the last decade.
Nor did Mr Jack address the relative gross domestic product (GDP) per head figures with Scotland’s share of offshore oil and gas extraction included.
Latest quarterly national accounts data published last October show that, including oil and gas extraction in Scottish waters, Scotland’s 2018 GDP is estimated at £180.4 billion, or around £33,200 per person. GDP per head for the UK as a whole was around £32,200.
These figures, published by the Scottish Government, can divide opinion. And the Fraser of Allander Institute has declared that people “need to be careful about how much it really tells us how well the core Scottish economy is tracking or faring in comparison to elsewhere”. Nevertheless, it would surely be difficult to argue Scotland’s relatively higher GDP per head on this basis is not something worthy of consideration by the likes of Mr Jack, who, after all, seems keen on comparisons.
The economy in Scotland, like that in the UK as a whole, faces major challenges. But the biggest of these is currently Brexit. This is a problem created by Mr Jack’s party, and the Scottish Secretary should focus on what this means for Scotland.
Returning to his weekend comments, when it comes to “slower” growth, Mr Jack should bear in mind the huge detrimental impact that the Tories’ sorry Brexit mess has had on the economy in Scotland and the UK as a whole.
Just in case it has escaped his notice, economists are projecting the UK likely stagnated, and may well even have contracted, over the fourth quarter of 2019 in the wake of official figures earlier this week showing GDP fell by 0.3% month-on-month in November.
So it is more a case of no growth than slow growth at the moment for the UK, Mr Jack.
Scotland was one of only two parts of the UK to avoid a contraction in private-sector economic output in December. Output north of the Border stagnated last month on a seasonally adjusted basis, having grown slightly in November, according to Royal Bank of Scotland’s latest PMI (purchasing managers’ index) report published on Monday. London achieved expansion, while all other nations and regions of the UK contracted.
Of course, the whole of the UK, including Scotland, has and will continue to be hampered badly by Brexit. Sadly, the impact will almost certainly be relatively greater in Scotland in coming years and decades as things stand, given the nation’s need for immigration in the context of its particular demographic challenges. The Tory clampdown on immigration will, of course, also pose very major challenges for the UK as a whole in the context of an ageing population, and the desperate need to boost the number of young people paying taxes to pay for public services.
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Businesses, many of them already facing skills shortages, will of course see their woes compounded. The damage is already being done in many sectors, given the plunge in immigration to the UK from other European Union countries in the wake of the Brexit vote. The UK would seem likely to remain unappealing to those from other EU countries in the transition period due to run from the January 31 EU exit date to the end of the year. And, of course, once this comes to an end, the Conservatives will have their way in terms of Mr Johnson’s pledge to “bear down” on immigration.
Weak festive retail sales figures have underlined the pressure on consumers.
Not that the arch-Brexiters seem to care about the impact on the economy or living standards. They want Big Ben to bong on January 31. It seems they are happy to celebrate damaging things with Brexit, as long as they somehow feel more British.
Differences in long-term trend rates of growth rather pale into insignificance relative to the damage already caused to the economy in Scotland and the UK as a whole by the Tory Brexit, and austerity.
North of the Border, even in the context of a fierce constitutional debate that looks set only to intensify on both sides, the Scottish Secretary should really stop talking the nation’s economy down.
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