Alf Young: Independence? No, still the economy

SNP glee at David Cameron’s EU promise was short lived, as polls show the economy is still first for Scots, writes Alf Young

IBUMPED into an acquaintance at half-time at a football match in Falkirk recently. We talked, unsurprisingly, about whether our team could stay in contention for the First Division title this year, and about our mutual friend, Colin, who has spent the past quarter of a century in Western Australia. Then, as frequently seems to happen these days, the conversation moved onto the economic state we are still stuck in right now. How fragile it seems.

“You know,” he said, “I was talking to a lawyer friend the other day and he was suggesting ours could be the first generation in history to leave nothing to our children.” Trust a lawyer to strike such an apocalyptic note, thought I. But even if that prospect is, on all available evidence, over-egging the gloom, it’s one that’s stayed with me.

At a time when, as Sir Mervyn King observed in Belfast this week, “living standards have been squeezed for longer than at any time in living memory” there’s a palpable and widespread fear of what the future holds for our material lives. And, in particular, a growing realisation that our generation – the baby-boomers who, in the main, had it so good for so long – may now be passing a toxic legacy on to those who follow us.

Yesterday’s confirmation that output from the UK economy shrank again, by 0.3 per cent, in the final quarter of 2012, has raised predictable fears of a triple-dip recession in the UK. Our economy is now a stand-out as the worst-performing major economy in the wake of the great financial and banking crash in 2008.

After contracting in four out of the last five quarters, it still languishes, 3.3 per cent smaller than at its pre-crash peak. Inflation has been consistently above target for three years now and could stay there for a further three. And average real take home pay is no higher now than it was way back in 2004. Despite a record low bank rate and a mountain of quantitative easing, the best the departing Bank of England governor can promise is a “gentle” recovery some time soon.The UK’s totemic AAA credit rating hangs in the balance. There are mutterings at the top of the LibDem end of the coalition about cutting infrastructure spending too fast at the outset and whether a Trident replacement is affordable or necessary. The chief economist of the OECD is urging the coalition to rethink its economic strategy. But, from the plush slopes of Davos, like a man already half way down his personal Cresta Run, George Osborne is insisting on no change of course.

Here in Scotland, a protracted period of UK austerity was seen by the yes side of the independence debate as a powerful way of persuading a majority of Scots of the merits of their case. Indeed, at one point the SNP gleefully put a price on it. We would all be £500 better off, they told us, if only we would seize the day. But, with that day still more than twenty months away, the reverse seems to be the case.

On the latest Scottish Social Attitudes survey evidence, the tide of opinion appears to be flowing the other way. Support for independence is back at post-devolution lows. According to Professor John Curtice, who leads the research, views on the economics of the union have changed since 2007. But not in the way many proponents of independence might have expected.

The economy is now “by far” the most important consideration in deciding whether to vote yes or no, say the researchers. More important than any sense of fulfilling an unrealised national sovereignty. But most people seem to be deciding that a fragile economy, showing scant signs of recovery, is a reason for staying in the union, not ending it. Voters seem haunted by a lack of confidence in the alternatives being offered.

As John Curtice and his colleague Rachel Ormiston pointed out in Thursday’s Scotsman, just 21 per cent of their sample say they would feel confident if Scotland were to become independent, while a whopping 59 per cent say they would feel worried, up as much as 13 points on the equivalent 2011 figure. It’s not difficult to see what is stoking these concerns. Five years of squeezed living standards for most people and dwindling life chances for children have taken their toll. Confidence in any of the political answers on offer is at a very low ebb. And when the constitutional answers are so hedged about with ifs, mights and maybes, it is even harder to quell the voting public’s fears and encourage a majority to have the confidence to embrace radical change.

Now that David Cameron has committed a future Tory government to an in-out referendum on UK membership of the European Union, the possible choices facing the average Scots man or woman, the millions who don’t join any party or commit to any constitutional cause, have taken on whole new layers of bewildering complexity.

If we were to vote yes in 2014, would we be voting for Scotland to stay in membership of the EU, whether the rest of the UK stays or goes? If we were to vote yes in 2014, would we be keeping the pound, as the SNP insists, even if the rest of the UK then votes no to the whole EU project? Or, with us in and them out, would we then have to embrace the euro? Or launch our own currency?

SNP strategists seem to think that David Cameron’s pandering to his eurosceptic ministers and MPs will magically boost the campaign for a yes vote in Scotland.

Nicola Sturgeon went to Dublin this week to tell a business audience that continued EU membership is “overwhelmingly” in an independent Scotland’s interest in terms of recovery, growth and jobs, whatever road the rest of the UK might choose.

But again, if the rest of the UK leaves and we are intent on staying, doesn’t that point inexorably to an independent Scotland having to negotiate a brand new accession treaty of its own from scratch? Days before Ms Sturgeon spoke, the director of the Yes Scotland campaign, Blair Jenkins, told a BBC webcast audience that, had Scotland been independent at the time, the banking crisis might never have happened here. Since the SNP were among the biggest cheerleaders for RBS in its mission to become one of the biggest banks in the world at almost any cost, I fear that interpretation of recent financial history is so much highland mist.

Both Mr Jenkins and Ms Sturgeon may have reflected on another revelation this week, that around a quarter of the £66bn of UK taxpayers’ money that bailed out RBS and Bank of Scotland owner, Lloyds, went into helping the shattered Irish economy.

Neither did. But it’s another example of the unintended consequences of the great crash and how it has left voters everywhere scornful of banks and wary of politicians, of whatever stripe, bearing gifts, even gifts in glittery constitutional wrapping paper.