KEY measures to boost Scotland’s economy are “impossible to deliver” in the UK political system as the Tories nor Labour will argue for them for fear of losing votes post-Brexit, a new analysis has concluded.
The paper, from independence project The Bottom Line, warns that the UK is in long-term economic decline and the signs are the pattern of slow growth and austerity will be repeated in the next decade.
Taking steps such as boosting immigration, rejoining the European Single Market and realising the “huge economic potential” in the transition to net zero could help avoid this.
But the analysis concludes: “These measures will not be implemented by either a Conservative or Labour UK Government, since both fear losing voters in the political environment that Brexit has created.
“The Scottish Government does not have the powers. This can only be achieved if Scotland becomes independent with the agency needed to implement such measures.”
The paper, which is published by The Bottom Line today, notes all eyes are on the “political dramas” currently being played out at Westminster.
But it argues that no matter who is Prime Minister, or which party is in power, they will “inherit an economic environment created by factors largely beyond their control that will constrain the path of the UK economy for the next several years”.
This includes external factors such as rising interest rates and the war in Ukraine driving up energy prices.
There are also “internal” factors, including the size of the UK Government’s national debt – the analysis notes the cost of servicing this is now at around £100 billion each year, nearly double the Scottish Government’s entire budget.
Other pressures include funding the NHS and social care, investing in new sources of energy to achieve a green transition and meeting demands of operating public services, such as the higher wages wanted by workers.
However the paper states the idea of focusing on getting away from a “high-tax, low growth economy” is taking the wrong approach.
It said: “This statement is correct as far as it goes. The mistake that has been made has been to get the direction of causality wrong. It is not high taxation that has been the cause of the low growth of the UK economy in the recent past.
“It is the low growth of the UK economy that has required high tax rates to make up total revenue.”
The Bottom Line initiative, which aims to add to the debate around the economics of an independent Scotland, involves David Simpson, founding director of the Fraser of Allander Institute at Strathclyde University, Graeme Blackett, previously economic adviser to the SNP Growth Commission, and former SNP MP and Treasury spokesperson Roger Mullin.
The project’s latest paper sets out three measures that it says would boost economic growth – including allowing immigration “that the economy needs”, rejoining the European Single Market and incentivising innovation and entrepreneurialism to “realise the huge economic potential in the transition to net zero”.
But it argues that no matter who is in power at Westminster, there is little prospect of these changes being made.
“It seems likely that the UK Government’s finances will be made to add up by politically unpopular cuts in several areas of government expenditure as well as increases in tax rates,” the paper states.
“It would take a miracle for the Conservative Party to win the next General Election.
“But it is important to emphasise that the election of a Labour Government will not change the prospects for the UK economy.
“Not only would such a UK Government remain under the influence of the same hostile external and internal environment, but it will not take the best chance of growth open to it, which is to rejoin the European Single Market and to allow the immigration that the economy needs.
“It will not do this, even though it knows it is the sensible thing to do, because it is fearful of losing the support of Brexit supporting voters, especially in the North of England.”
It concludes: “There is a broad consensus for these measures in Scotland. However, the Scottish Government is helpless to implement them, since the powers to do so rest with the UK Government.
“Scotland needs the agency that comes with independence, in order to take the actions required to build a better future.”
