From today’s Scotland Politics section of the BBC News website: ‘Scottish economy FORECAST to grow slower than UK’. (my emphasis)
It begins: ‘Scotland’s economy is PROJECTED to grow more slowly than the UK over the next 50 years, according to the Scottish Fiscal Commission (SFC). The independent body projected that Scotland’s GDP would grow by 0.9% per year on average between 2028-29 and 2071-72.’
As an aside, it is astonishing how statistically precise economists claim to be! It begs the question: is Scotland’s economic fate already sealed for the next 50 years?
Here we read this (with my emphasis): ‘1.3 Our approach to the long-term fifty-year projections is different to our five-year medium-term forecasts, …. Long-term projections are ILLUSTRATIVE, there is LARGE UNCERTAINTY REGARDING POLICY CHANGE as well as HOW THE POPULATION AND ECONOMY MAY EVOLVE. Instead the key aim is to highlight how broad trends will affect the public finances over time. WE USE THE DESCRIPTION ‘PROJECTION’ RATHER THAN ‘FORECAST’ in relation to the long-term analysis to reflect this. The projections shown here indicate what would happen given our assumptions about the population and economy.’
So this is explicitly NOT being put forward as a 50 year FORECAST for the reasons stated by the SFC – EXCEPT it is in the BBC’s headline!
In another notable part of the report: ‘1.4 We outline how our approach to fiscal sustainability NEEDS TO CONSIDER UK GOVERNMENT FUNDING AND SPENDING PROJECTIONS as well as UK ECONOMIC PERFORMANCE, not only the Scottish Government’s Budget and the Scottish economy in our ‘Approach to fiscal sustainability: consultation’ paper’.
‘For example, the INCOME TAX NET POSITION MATTERS RATHER THAN THE LEVEL OF SCOTTISH INCOME TAX REVENUE. The net position is the difference between Scottish income tax revenue and the Block Grant Adjustment (the amount removed from the Scottish Budget to reflect what would have been raised or spent in Scotland, had Scottish revenues grown in line with the rest of the UK since its devolution). The INCOME TAX NET POSITION IS AN IMPORTANT DETERMINANT OF THE SCOTTISH BUDGET FUNDING POSITION and is important for the future sustainability of Scottish Government finances.’
I can’t claim to understand all the issues being raised here but it does seem that the Scottish Government’s long term financial position is conditional on a complex of dependencies on UK-wide factors. This includes UK government policies beyond its control – and effectively beyond the influence of Scotland’s electorate. And this is the set of circumstances that give rise to a dismal 50 year projection!
BBC Scotland’s Douglas Fraser, writing in the BBC News website on this SFC report, leaves his readers with a rather scary, negative conclusion – but he is expressing a negative outlook based on 50 year projections for a Scotland WITHIN the UK! (I wonder if even for a moment he pondered that as he wrote his piece?)
Mr Fraser begins: ‘Economic projections depend on taking recent trends and pushing them into the future. And if the past few years are any guide, there’s a lot that will squeeze Scotland’s economy in the next 50 years.’ Later he adds ‘So the demographic forecasts tell us the course we’re on, if other things don’t change, and IF WE DON’T MAKE CHOICES TO CHANGE THEM.’ Notably on possible changes, he acknowledges the potential impact of changing migration policies: no mention that these are reserved to Westminster!
He concludes: ‘Today’s report from the Scottish Fiscal Commission is the prelude to a study, due next March, of what this could mean for the taxation base (shrinking) and public spending (rising).
‘The Commission has already warned about more shorter term PRESSURES ARISING FROM SCOTTISH GOVERNMENT PROMISES ON WELFARE BENEFITS THAT WILL BE HARD TO SUSTAIN, while Audit Scotland points to health and social care pressures that are already unsustainable.’
(Presumably in writing this, Mr Fraser is aware that the next UK PM – the one we haven’t been able to vote on and who will lead a political party which a majority in Scotland hasn’t voted for for well over 50 years – considers that the UK’s economic ills will be solved by tax cuts. )
Mr Fraser ends: ‘You can safely predict that the (SFC) report next March will not be comfortable reading for policy-makers, and particularly those who wish to retain the current range of public services that are free to use.‘
So back to the question, IS Scotland’s economic fate already sealed for the next 50 years, with ever poorer public services? Mr Fraser seems unsure: perhaps having noted that the future is not inevitable, it is easier for him to frame his final words negatively than end by referencing the blindingly obvious alternative, positive and aspirational case for Scotland, its electorate and government, namely to acquire the agency of a normal nation-state and so enable necessary, less fettered change. appropriate to Scotland’s needs and wants.
In the SFC’s projections there seems to be much emphasis on factors which depend on what happens at a UK level – UK government funding and spending; the UK’s economy, of course with a performance dominated by London and SE England, relative to the economy of Scotland; UK government policies including e.g on the reserved matter of immigration. Faced with a dismal projection, why maintain the status quo in terms of who has the powers to deliver change? The case for self-determination just gets more compelling!