Professor Gallagher and his boss Mr Brown should stop seeking to con Scotland’s electorate

Gallagher & Brown

From stewartb

It was a forlorn expectation that Unionists would have refined and improved their economic arguments since 2014!

It is blindingly obvious that whilst STILL WITHIN this Union, Scotland ‘benefits’ from – of course has to rely upon – borrowing (and money creation) powers that are vested exclusively within the UK in the Union government.

If ‘borrowing’ is required – as it is by most advanced western economies, almost always – then it’s hardly surprising that Scotland needs to access to Westminster’s ‘borrowed’ funds too – and more so during a global pandemic. That is only a weakness in the sense that Scotland has weak and no agency respectively in terms of fiscal and monetary powers.

And as Scotland’s economic development over many, many decades has been limited by a deficit of agency over these same powers then it’s not surprising that reliance on Union borrowing is greater at times of severe economic stress. But for perspective see this: House of Commons Library (2021) The budget deficit: a short guide. Briefing Paper 06167 (27 May 2021).

It states: ‘In 2020/21 (UK) government revenue – from taxes and other receipts – was £793 billion while government spending was £1,093 billion (£1.1 trillion). The deficit was therefore £300 billion, equivalent to 14.3% of GDP, which is A PEACETIME RECORD’.

‘The IMF report UK government borrowing of 13.4% of GDP in 2020. Amongst the G7 countries, ONLY THE US IS FORECAST TO BORROW MORE THAN THE UK, relative to the size of their economies.’

Why has the UK been under such severe stress that led to such high levels of borrowing? A legacy of past Westminster policies; a function of pandemic management? And how could Scotland possibly have avoided the fallout from this UK condition given many, many decades of its enforced dependency on Westminster’s policies?

But how is such a sudden increase in a nation state’s deficit financed? It seems by having one’s own currency and/or having a central bank dedicated to helping finance government expenditure.

The HoCL briefing states: ‘The budget deficit is financed by sale of government bonds. These are essentially interest paying “IOUs” which the government sells to investors. …. The bonds make up most government debt.

‘Once the bonds have been bought, they can be traded by investors on secondary markets. …. The Government has SOLD RECORD AMOUNTS OF BONDS during the coronavirus pandemic, which is UNSURPRISING given the size of its deficit. Investors were lending to the Government at relatively LOW RATES OF INTEREST prior to the pandemic and have continued to do so.

‘The Bank of England has been BUYING LARGE QUANTITIES OF GOVERNMENT BONDS from investors on the secondary market. …., through its quantitative easing programme. The purchases have also made it easier and cheaper for the Government to sell new bonds.

‘The lower net interest figure is a consequence of the Bank of England holding significant amounts of government debt, through its quantitative easing programme.’

‘The lower net interest figure is a consequence of the Bank of England holding significant amounts of government debt, through its quantitative easing programme.’

So in short, Professor Gallagher and his boss Mr Brown should stop seeking to con Scotland’s electorate and if they do wish to prevent Scotland achieve normal independent country status then they should engage respectfully in SERIOUS debate.

6 thoughts on “Professor Gallagher and his boss Mr Brown should stop seeking to con Scotland’s electorate

  1. This year’s GERS figures tell a story about the state of Scotland’s economy—flagging before the pandemic and made worse by it.

    Fundamentally, however, the report exposes the dangers of independence whilst demonstrating how, by £1800 per person, Scots are better off in the UK.

    This from Jackie Baillie but she does not explain why this is the case just the usual Scotland is a subsidised nation.

    Liked by 1 person

    1. Scott, this year’s GERS figures PURPORT to tell us Scotland’s economy is a shambles, but the vast bulk of the data underlying GERS consists of estimates and allocations, as very little provable Scotland-specific data exists. Government Accounting across the globe leaves much to be desired (just ask any accountant who has studied this) and UK’s Gov’t Accounting is among the most criticised for the weakness of its methodology, the inherent obfuscations and the widespread use of estimates and allocations as firm, reliable data are simply not available. Scotland, obviously is a sub-set of UK data, so GERS starts from an unreliable basis.

      There are also huge inconsistencies: all the income in GERS is stated as being “Income in Scotland” and therefore omits income deriving from the Scottish economy which is received in rUK, generally London, e.g. Income Tax on investment income, Income Tax of individuals with residences in Scotland and elsewhere in rUK who declare all their income as rUK to avoid paying the higher rates of IT in Scotland. Likewise VAT in its entirety. Estimates are made of the values of these and credited to GERS, but estimates are guesses and subject to inevitable retrospective corrections (which themselves are estimates) and some income, e.g. share of Corporation Tax, will inevitably be omitted altogether.

      On the other hand, all GERS expenditure is stated as “Expenditure for Scotland” and contains allocations and estimates of costs incurred in rUK on Scotland’s behalf. These might include costs of civil servants in Whitehall (the Scotland Office, MOD, the Treasury etc), but, of course the taxes, NI and VAT on purchases of these state employees are recorded as English income and benefits the English economy without any offset to reduce the charge to GERS. Also our share of Interest on the National Debt is inflated by our allocation being based on the UK Gov deficit including the total of Quantitative Easing. QE is generally portrayed as “borrowing”, but from whom? In fact the sum is a Treasury overdraft at the Bank of England, which, despite its claims of independence, is effectively a department of the Treasury. The UK Gov is “borrowing” the QE sums from itself and these sums should form no part of the National Debt: they represent Gov spend into the Private sector of the UK Economy in times of economic stress and will never be “repaid”. But Scotland is charged for the imaginary interest on money the Treasury owes to itself.

      There are also inconsistencies in treatment of accrual bases which result in “apples & pears” comparisons. The conclusion of most accountants and economists is that GERS is simply a political tool to denigrate Scotland, its economy and mislead its people, as it was designed to do by its creator, Iain Lang. The big mystery is not why do some people want to believe GERS; it’s why does the Scot Gov endorse it by commissioning it annually. Get it audited by Audit Scotland and their report would have to point out the inconsistencies and inaccuracies. All this begs the question: how would the Tories react if they ever, God forbid, became the Scot Gov and had to bear the consequences of GERS making them look utterly incompetent?

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  2. It is Scottish oil and gas which has substantially provided international confidence in Sterling these past 50 years, and, renewables will probably replace that. The Bodger and his cronies are aware of that.

    The financial classes of the City also know that and so independence for Scotland is opposed on their instructions.

    This is a further example of the Bodger’s ‘pooling and sharing’ in practice: Scottish oil and gas was pooled and shared amonget the financial clique in the City. A further example of the Bodger’s ‘socialism for the rich’, as when he transferred shedloads of cash to the banks in 2008.

    Liked by 4 people

  3. I would just like to take this opportunity to express my deeply felt gratitude to the tax-payers of the UK/England for their continued and selfless donations of large quantities of spondulicks which have kept me in caviar and Champagne ( the good stuff ! ) for all of my long , long life up here in the Northern Wastes .
    Many thanks – and keep the cheques coming !

    Liked by 4 people

  4. Gordon Brown & the cronies ruined the world economy. Illegal wars, financial fraud and tax evasion. Iraq, Lockerbie, Dunblane kept secret for 100 years. The illegal Barnett Formula etc taking £Billions/Trns out of Scotland and ruining the world economy.

    It is absolutely scandalous. The International Laws that have been broken The £Trns that have been wasted bombing the world to bits. Monies that could have relieved poverty and brought benefit to millions of people. Brown and his associates broke International and brought poverty to Scotland and to the rest of the world.

    Lying, cheating, greedy, dishonest and corrupt unionists at Westminster. Scotland outvoted 10 to 1. Scottish Independence would improve the world economy and bring prosperity. Contain Westminster corrupt power. It would improve Scotland’s prosperity. Scotland’s revenues and resources would not be taken to fund London S/E. Westminster poor, bad expensive wasteful projects of little benefit, especially to Scotland.

    Liked by 1 person

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