Leaders: It’s time Plan A stood for Plan Abandoned

Published on 19/07/2012 00:00

AS IF this summer wasn’t grim enough, with grey skies blocking out the sun, yesterday another cloud appeared on Scotland’s horizon in the form of dispiriting news about the economy.

Any hope that we might be starting to emerge from economic gloom has been scuppered by a formidable combination of national and international factors, not least of which are the slow-down in China, continuing economic woes in the United States and the continuing threat of a eurozone meltdown.

What this means in practical terms in Scotland is a fall in gross domestic product of 0.1 per cent during the first three months of 2012, following hard on the heels of a similar fall in the previous three months. Scotland is officially in a 
double-dip recession.

Many of the ways our politicians are responding to this challenge are creditable and welcome. The Scottish Government has a series of capital projects which will be useful in giving a boost to one of the most troubled sectors in the economy, construction, which has shrunk by 7.3 per cent over the past year. At Westminster, George Osborne has shown some commendable imagination in offering to underwrite loans to allow big capital projects to proceed – a necessary development given the banks’ continued reluctance to lend. This follows the Chancellor’s previous display of imagination in using pension funds to finance much-needed capital investment.

The truth is, however, that there is diminishing scope for such clever ways around Treasury strictures on borrowing. It is hard to avoid the conclusion that it is the strictures themselves that are the problem. There is an urgent need for them to be reviewed in the light of Britain’s economic predicament, to see if the reins can be loosened a little.

There is only so much tinkering that can be done, however. What really needs to be revisited is the UK government’s dogged adherence to a Plan A, in which the A stands for Austerity. Mr Osborne has been at pains to ensure the markets are in no doubt that he is serious about tackling the country’s debt mountain. But there is a growing consensus that the policy required to see off the bond traders two years ago is not the policy required now, under different international circumstances and in the absence of the green shoots of recovery that everyone hoped would now be beginning to peek through the soil. What the markets want to see is growth, and quickest way to growth is a cleverly targeted increase in government spending.

Keynesianism has been a dirty word at the Treasury for two years, but circumstances change, and policy must change too. The injection of money into the economy argued for by both Labour and the SNP must happen if Scotland and Britain as a whole are to begin the slow climb back to recovery.

Dismal diplomatic failure on Syria

EACH new snippet of news from Syria serves to confirm the worst possible fears for the region. Yesterday was no exception, with suicide attacks in Damascus intensifying what

international agencies now

accept is a full-scale civil war. If anything, the country seems to be

accelerating into greater chaos and bloodshed, with the world seemingly incapable of a significant intervention.

For an explanation of this abject failure of diplomacy we must look to the United Nations’ headquarters in New York where, in the Security Council, both

Russia and China have repeatedly blocked any attempt by the international community to apply real pressure on the Assad regime in Damascus.

These two countries argue from what they regard as the moral high ground, pointing to the western-sanctioned military action in Iraq and Afghanistan as a rationale for a non-interventionist doctrine in the Middle East. When examined closely, the stance of Moscow and Beijing speaks more of their own vested interests than it does about legitimate concerns about illicit wars.

Efforts to put diplomatic pressure on the Assad regime have failed dismally. It is time the diplomatic effort shifted its focus and was directed squarely on Russia and China, with an unforgiving light shone on their

motives in blocking international pressure in the Syrian regime.

A tragedy is unfolding before our eyes in this strategically important corner of the Middle East, which threatens to destabilise neighbouring nations already in a state of potentially dangerous flux.

If the world cannot talk China and Russia around, little will be left of Syria but ashes.