Leader: Bleak growth forecast that must be heeded

Published on Wednesday 9 November 2011 00:00

THERE is much contentious assertion in the latest analysis from the Fraser of Allander Institute. But few would dispute its downgrading of forecasts for Scotland’s economy this year and next.

Despite the talk of a superior Scottish performance relative to the rest of the UK, we are now perilously near to recession. The institute has halved its growth forecast for this year to just 0.4 per cent, while it has cut its growth estimate for next year to just 0.9 per cent compared with a 1.5 per cent forecast previously. Both these are lower than the median of independent forecasts for the UK overall (1 per cent and 1.5 per cent respectively), while over the year to the second quarter, GDP growth lagged that for the UK as a whole.

If there is a “Plan MacB”, it isn’t working. While construction was stronger in Scotland over this period, service sector growth was just 0.1 per cent, compared with growth of 1 per cent in UK services. Within this total, business and financial services in Scotland are now showing particular weakness. Bleak though all this is, the institute warns the economy may be much worse off than suggested by the shorn estimates, due to permanent loss of output. There is little here to give the SNP administration any comfort, while the slowdown in the eurozone offers little prospect of any export-led recovery. The report itself could have been more forthcoming on policy suggestions rather than its contentious dismissal of key economic concerns as “myths”. Massive debt and an over-large public sector remain priorities for action.

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Beachdair

Wednesday, November 9, 2011 at 02:08 AM

EEA membership would allow the unhindered restoration of the Scottish fishing industry and other wealth creators that are presently being strangled by EU ideology. It would free Scottish agriculture from the Brussels straitjacket. This move alone could result in a substantial rejuvenation of the Scottish economy. A move to the EFTA side of the EEA, from Scotland’s present part-membership of the EU side, would cause no disruption whatever to Scotland’s economic links with Europe, which would continue unchanged. No action would be required to leave the EU side of the EEA – since Scotland as such has never been a member of the EU it only needs to refrain from applying to join. Independent Scotland should have nothing to do with the EU, but should conduct its business as a member of the European Free Trade Association (EFTA) of the European Economic Area (EEA) as Norway and Switzerland have done.

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Beachdair

Wednesday, November 9, 2011 at 02:07 AM

The EEA provides open access to the Single European Market as well as the European research and development facilities, allows participation in drafting EU legislation, leaves Scotland its own fishing and agriculture policies and more, and provides all the economic benefits Scotland needs. The EEA is in effect the Common Market continuing, which is the limit to what was approved by the Scottish voters in the 1975 referendum. No degree of European integration beyond this has democratic legitimacy in Scotland. One propaganda myth has to be dispelled here. It is untrue that the EFTA side of the EEA has to accept all the EU economic legislation as it stands without consultation. Under Articles 99 to 101 of the EEA Agreement the EFTA members of the EEA have exactly the same rights as its EU members as regards participation in the drafting of economic legislation. This includes alterations to existing EU regulations, and membership of relevant EU Commission committees.

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Beachdair

Wednesday, November 9, 2011 at 02:03 AM

Another reason there can be no question of Scottish membership of the EU is because it requires new members to commit to adopting the ‘euro’ currency. As is now well known, the ‘euro’ has been and continues to be a major disaster Membership would also involve a commitment to participate in EU military operations outside Europe, along with other considerations.

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Beachdair

Wednesday, November 9, 2011 at 02:02 AM

Any economic advantages of the European Union can be realised through Scottish membership of the 30-member European Economic Area (EEA), which includes all of the EU member countries. The economic benefits of the EEA would be further enhanced by membership of the European Free Trade Association (EFTA), whose 20 trading agreements with other parts of the world are not open to EU members. As an EFTAEEA member Scotland would be liable for a contribution of about £200 million to the EEA solidarity fund for weaker EEA member states. It is NOT a contribution to the general EU funds. The EFTAEEA contribution is less than a quarter of the EU amount. How many Scottish jobs could be created with the difference?

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Beachdair

Wednesday, November 9, 2011 at 02:01 AM

Scotland’s share of the UK’s annual EU “dues” was £845 million in 2010, up from £532 million in earlier years because of Scotland’s proportion of the IMF and direct aid to the Eurozone. £845 million is more than £162 for every man, woman and bairn in Scotland – after all EU "grants" have been accounted for. That cost will rise every year. The EU takes Scotland’s money, deducts its own huge overheads, and returns only a minute portion of the remainder to Scotland in "grants”, which are only a tiny fraction of our own money being returned.

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Beachdair

Wednesday, November 9, 2011 at 02:00 AM

The UK’s membership of the EU has been the greatest disaster to befall Scotland since the 1707 Treaty of Union. The EU Common Fisheries Policy (CFP) alone is costing Scotland considerably more than £1,500 million in lost wealth creation every year. The EU has destroyed tens of thousands of jobs through the CFP. What the figures cannot reveal is the amount of personal tragedy and communal disruption that lie behind them: bankruptcies, the uprooting of individuals and families, the destruction of thriving communities with centuries-old cultural traditions and communal lives. Major harbours, like Lossiemouth, that were the focus of social and economic life twelve months in the year, are now marinas for a handful of yachts. One can imagine the reaction if the EU had reduced the Spanish or French fishing fleets by two thirds simply to make way for incomers. And fishing is by no means as important to those countries as it is to Scotland. The gross incompetence of the EU fisheries management of the CFP continues to this day. Under the Lisbon Treaty, the EU controls all “marine biological resources” (i.e. from whales and basking sharks down to the last frond of seaweed) in Scotland's Exclusive Economic Zone seas. Under existing EU legislation, all national waters right up to the beaches will come under exclusive EU fisheries competence from the end of 2012, and will be regulated under EU law and not Scots law. Since the Lisbon Treaty also transfers powers over energy to Brussels, fishing is obviously only the thin end of a wedge that will eventually see all marine resources coming under Brussels control. So much for Scotland’s oil...

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Beachdair

Wednesday, November 9, 2011 at 01:58 AM

Sorry this is off-topic, but since David You-know-who doesn't permit comments on the lead article 'Scotland’s £8bn bill to join the eurozone', I have something to say on that subject. I have made numerous posts on th Scotsman explaining in detail many reasons why independent Scotland should have anything at all to do with the European Union, let alone the Euro. Well, here's another good reason.

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