As we await the new Labour Government’s Budget on October 30, there seems like a lot more gloom and trepidation than hope when it comes to the economic outlook.
Scotland’s private sector economy recorded a ninth consecutive month of growth in September, a survey published last week showed, and this is no mean feat against a miserable UK backdrop.
There was further good news with the rate of employment growth in the private sector economy north of the Border accelerating to its fastest since May 2023 and the third-highest among the 12 UK nations and regions.
However, while the decline in manufacturing activity in Scotland eased to only a fractional pace, there was a sharp fall in new orders for this sector last month.
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The sector has, of course, not been helped by the loss of frictionless trade with the UK’s largest trading partner, the European Economic Area, as a result of Brexit.
Former prime minister Boris Johnson did not seem keen to face up to this reality in an interview with radio station LBC.
He rather dodged presenter Nick Ferrari’s points about the economic impact as he gave Brexit 10 out of 10 for “constitutional purity”, whatever that means, and a remarkable nine out of 10 overall. Remarkable because one wonders how anyone, even Mr Johnson, could give such a score to a folly which has caused so much damage.
My column in The Herald on Friday observed: “It has been nauseating and excruciating in broadly equal measure to observe Boris Johnson trying to claim Brexit has somehow been positive.”
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As we await the Budget, Labour’s messaging on the economy and the public finances since its July 4 General Election victory has been in the spotlight.
My column in The Herald on Wednesday flagged the views on this topic of Mairi Spowage, director of the University of Strathclyde’s Fraser of Allander Institute.
Ms Spowage said, as Fraser of Allander published its latest economic commentary earlier this month: “The new UK Government has come into place in July, and the new Chancellor, Rachel Reeves, has set out her view of their fiscal inheritance and the difficult decisions which may need to be made in order, as they would see it, to restore economic stability.
“The rhetoric around this has the potential to dent business and consumer confidence and contribute to the softening economic performance over the summer. However, it is always difficult to definitively say that - the economy is a dynamic organism rather than a predictable mechanism. Many businesses may well be waiting to see what is in the Budget on 30th October to have the confidence to grow and invest.”
My column observed: “To say that Sir Keir Starmer has made Rikki Fulton’s Reverend I.M. Jolly character look upbeat would not be too much of a stretch.
“And at least the Rev. Jolly delivered some laughs.”
The column also made the point that the difficult economic outlook for the UK had arisen partly from choices made by Labour, crucially around embracing the Tory hard Brexit, and retaining the Conservatives’ fiscal policy constraints and thereby stifling potential for major investment.
It said: “Sadly, for now, it is difficult to see better times in the short term, not because it is impossible for the new Labour Government to lead us towards them but because it has ruled out embarking on a brighter path through the choices it has made.
“The two big simple realities, putting aside the talk and mood music for a moment, are that Labour has tied itself up with the Conservatives’ fiscal constraints and is sticking with the damaging hard Brexit. In addition to these blunders, its tone is truly confidence-sapping.”
Against this difficult backdrop, we should perhaps take the view that it is good that the performance of the Scottish economy is not worse.
What seems clear, however, is that it is going to be another difficult winter.
We have already seen a sizeable jump in domestic electricity and gas prices from October 1.
Household energy bills in the UK remain excruciatingly high by historical standards, and Labour has of course decided to remove entitlement to the winter fuel payment from many millions of pensioners by choosing to means-test this.
Scottish Labour leader Anas Sarwar suffered an embarrassing mini-rebellion from within his party on this controversial issue at Holyrood last week.
High energy prices have greatly reduced the spending power of UK consumers in general for a long time now.
Brexit continues to take its toll on the economy and living standards.
And it remains difficult to see much clear blue water between Labour and the Conservatives when it comes to the public finances and the economy.
Given the Tory track record of failure on the economy since 2010, this is clearly not a good thing.
Sir Keir’s talk of “tough” choices has understandably left many people concerned about what the Budget will bring.
As noted again in my column on Wednesday, he seems to be striking the same tone as former Conservative prime minister and chancellor David Cameron and George Osborne back in 2010.
People do not want to hear a tale of further austerity from Sir Keir. After such protracted difficult times, surely people would want some hope of a lift, not in a few years’ time but more immediately.
Sir Keir does not have an easy job. However, he has made big choices which have completely boxed him in. And it is no surprise his approval ratings have dropped so sharply in the months since he was elected.
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