The economy has been very much in focus in the last week, with a speech from First Minister Humza Yousaf highlighting Brexit’s grim effects on devolved public spending potential and some key official data and survey evidence published.
Starting with Mr Yousaf’s speech on Tuesday, hosted by the London School of Economics and Political Science’s European Institute, this dealt with some major issues.
As my column in The Herald on Friday observed, there was some dispute over Mr Yousaf’s calculation of the amount of devolved public spending of which Scotland had been deprived in 2023 as a direct result of Brexit.
However, whether it is £1.6 billion, as Mr Yousaf said, or £1.2bn, as the National Institute of Economic and Social Research think-tank calculated, it is a very big number.
And it is crucial that this is highlighted.
We continue to hear the baffling and vacuous mantra, from those delighted the UK has been hauled out of the European Union in a particularly dramatic manner, that Brexit is done and we must move on.
There is a “nothing to see here” undercurrent in relation to all of this. And, of course, there is in many cases a desire to silence those who would point out the huge damage of the Brexiters’ folly: a kind of blustering and at times bullying attitude.
READ MORE: Ian McConnell: Politicians must carry the can for huge Scottish public finances hole
Given this backdrop, it has been good to see a growing realisation among the electorate at large that Brexit has been damaging, and some very plain analysis by experts of the great cost.
Richard Hughes, chairman of the Office for Budget Responsibility, said last spring of Brexit’s effect: “We think that in the long run it reduces our overall output by around 4% compared with had we remained in the EU.”
The OBR was set up by former Conservative chancellor George Osborne in 2010 to provide independent economic forecasts.
Centre for European Reform associate fellow John Springford estimates Brexit had by the second quarter of 2022 reduced the UK’s GDP by 5.5%.
And economists at heavyweight US investment bank Goldman Sachs have calculated the UK’s economic output has fallen short of that of similar countries by about 5% since the 2016 Brexit referendum.
Mr Yousaf’s analysis of the effect of the UK’s hard exit from the EU on devolved public spending potential, while he is highlighting a demoralising cost, is most welcome in getting across to people that Brexit is not some abstract concept.
Brexit is, rather, absolutely intertwined with the performance of the economy and, crucially, with living standards.
Summing up his point on Brexit and public spending, Mr Yousaf said: “We have suffered - our institutions have suffered, our public services have suffered, and, ultimately, our people have suffered to the tune of £1.6 billion that could have been invested in Scottish public services because of a Brexit that, remember, Scotland overwhelmingly rejected.”
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Even if you substitute the National Institute of Economic and Social Research’s £1.2bn figure for the £1.6bn, Mr Yousaf’s point is just as valid.
Brexit is, of course, the last thing the embattled UK economy needs.
Official figures have shown the UK economy tumbled into recession in the final three months of last year with a second consecutive quarterly fall in gross domestic product.
Data published on Wednesday showed a 0.2% month-on-month rise in GDP in January.
READ MORE: Ian McConnell: Good news on Scotland but some do not like it at all
There was a little bit of excitement around whether this meant the UK recession might be at an end.
It is obviously too early to say.
There is a good chance the UK economy will exit recession in the first quarter but that is hardly going to make any difference to the way things feel for people, who had to endure protracted stagnation before the technical recession hit.
Recession or stagnation - neither feels good.
Danni Hewson, head of financial analysis at stockbroker AJ Bell, put it well.
She declared: “Being serious, 0.2% is hardly a number to get excited about - it’s just a continuation of the trend that we’ve seen over the past couple of years. An economy bumping along the bottom, flatlining and stagnating.”
Against the tough economic backdrop, interest rates remain in focus.
The Bank of England has hiked UK base rates from a record low of 0.1% in December 2021 to 5.25%.
Ms Hewson said: “Psychologically shedding the label of recession is important because it helps foster confidence. But the biggest shot of adrenaline is likely to come once the Bank of England finally delivers the much-anticipated interest-rate cut that markets are expecting in the summer.”
The economy of Scotland is, of course, facing the same pressures as that of the UK as a whole.
However, there was some cheer in a key survey published on Monday by Royal Bank of Scotland. This showed private sector employment growth north of the Border in February was greater than that in any other nation or region of the UK.
Employment growth resumed in manufacturing, and strengthened in services.
The employment reading in the survey might have come as a surprise to some of the doomsayers on Scotland.
It says much about the febrile nature of politics in Scotland right now that many reacted badly to this surely good news when Mr Yousaf posted a story about it from The Herald on social media platform X on Monday. Some of the responses signalled raw fury. It seemed a strange thing indeed to get angry about.
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