Stability. This is the economic vision for Scottish independence emanating from the current SNP administration.
Is this the rallying call for a movement that wants a different type of economy? During our Festival of Economics last year, we interviewed SNP MP Stewart Hosie, who was, at the time, shadow spokesperson for the economy at Westminster.
It was a fascinating conversation. Stewart highlighted the importance of "economic stability" and "fiscal responsibility" as Scotland migrates to an independent economy.
I would suggest that there has been no significant change for an independent Scotland since then—or, in fact, since the referendum in 2014.
So the vision: A stable, fiscally responsible Independent Scotland ready to re-enter the heart of the EU.
The ideas behind 'sustainable growth’ are alive and well.
For 2024. See 2014. And we all know what happened there
My argument is that the vision is simply more of the same as what we have now; that independence alone is not enough to create the type of economy and society most of us demand.
This is how stability (business as usual) and fiscal responsibility (now seen as a moniker for austerity) play out.
- We must pay significant attention to how we (as a government) are perceived ‘by the market’ when we become independent. We must be seen as ‘good stewards’.
- We must take our place alongside similar centrist governments in Europe. Using Sterling (the preferred option), we will run a very tight ship and will not spend beyond our means. We will not rock the boat as we try to establish ourselves as a ‘fiscally responsible’ nation.
- International financial markets and foreign governments will charge us a fair interest rate for borrowing from them because we will make sure we can pay them back.
- We will only borrow money to spend when we are confident that we can repay the loan.
- We will have attempted to pay off ‘our share’ of the UK Government’s national debt. This is a very positive message from us: we are like the Lannisters in Game of Thrones: we will always pay our debts!
- We will pursue economic growth (an increase in GDP), which will allow us to invest our foreign currency in our economy.
- We will start by ‘grandfathering' UK regulations in financial services, corporate governance, etc., to gradually transition to a new, nicer market economy.
- We will have a debt in foreign currency, but it will be well managed. (An important reminder: Scotland will not have its own currency, so it MUST borrow foreign currency to finance the government above what it collects in taxes.)
- We will prove that we can manage our economy by keeping to the debt and deficit ratios set by the European Union (even before we are a member): the fiscal deficit will be less than 3% above GDP each year, and the debt-to-GDP ratio will be less than 60%. We will achieve this by aiming to run a government surplus: taking more in taxes than we inject back into the economy.
- We will progress our vision of a wellbeing economy by prioritising the areas of our economy, more support for carers, a circular economy, more progressive taxation, etc., that lead to wellbeing.
- Building our exports, especially with the rUK, will be a major focus as we seek to reverse the trade imbalance with our biggest market. By this point, we may be closer to a trade balance.
- All the while, we will gradually move our regulatory system to mirror the EU.
Given the SNP leadership’s direction and vision over the last decade, it would be hard to argue with any of the above. Perhaps the only place for argument could be the inclusion of “wellbeing”, a term ceremoniously dumped after the Swinney/Forbes (below) pact earlier this year.
Feel inspired?
I doubt it.
I attribute much of Scotland's malaise to the lack of a vision for our independent economy and society: ‘Scotland a nicer UK-lite nation’ says the campaign coffee mugs.
Last week, we asked for thoughts. Here are some highlights.
Kris said: “The last 50 or so years have given us Neoliberal "slash and burn" economic policies…. Any economic plan for an independent Scotland will need to aim to use government/public funding in addition to private capital. There will need to be a structured plan for the rebuilding of our infrastructure, repair of buildings, streets, roads, and public and private buildings.”
Robert echoed the same thoughts: “Surely, we need to be a currency issuer from day one of Independence to enable us to fund our plans for a wellbeing society.”
Another Robert commented: “I have absolutely no faith that the colonial minds of most of the ‘leaders’ of contemporary Scotland have the nous, boldness, courage, or determination to even envision a thriving independent Scotland never mind actually to bring this about. We need new leaders and a new economic plan.”
“The idea of “sustainable growth” is an oxymoron and should, like the report, be consigned to history,” said Geejay.
Peter suggested engaging with the mainstream on their terms. “GDP and deficit is the current conversation," he said, and “we could also elaborate on GDP and the potential of growth".
Cath suggested a different approach: “I would be more inclined then to talk about capabilities, tools and levers and to explore the dynamics of an economy a bit. Then run a limited number of scenarios based on pursuing different priorities.”
Across these several comments, you can see a theme—unhappiness with today’s vision.
I attribute this lack of vision to the SNP's policy paradigm. What do I mean by that? And why is it significant? Next week, we launch a major piece of work that explains it all.
