Hole in one
Perhaps C Hegarty (Letters, 6 and 8 November), could learn a lesson from that other famous Labour Chancellor of the Exchequer, Denis Healey, namely his first law of holes: “When you’re in a hole – stop digging.”
As clearly outlined by Ian Lewis (Letters, 7 November) the Bank of England-set base rate underpins the interest rates across the whole economy and therefore the Bank of England controls the general levels of mortgage rates. To accuse Gordon Brown of “enormous ignorance” is simply risible.
Furthermore, economic facts, if chosen selectively, can mislead. The constant parroting by Nationalists that Scotland raises 9.6 per cent of revenues but absorb 9.3 per cent of costs is intended to give the misleading impression that because the revenue figure is higher than the cost figure Scotland’s fiscal balance is positive.
Of course, as costs greatly exceed revenues the fiscal deficit is of the order of some £11 billion, and, indeed, this deficit figure is only reached by allocating 90 per cent of North Sea oil revenue to Scotland’s revenue account.
To argue that an independent Scotland would be in a better position to fund public services than the rest of the UK as the UK’s fiscal deficit as a percentage of GDP is slightly higher is spurious. Because your neighbour is running up debt at a slighter faster rate than you, it does not suggest that you should go out and spend more money.
Given the high absolute level of the deficit a lot of painful decisions on spending are going to be required in Scotland, in or out of the UK.
Regrettably, our current SNP government, with an independence referendum to prepare for, shows little appetite for squaring with the Scottish people on the true state of the Scottish economy.
Ian Lewis (Letters, 7 November) is wide of the mark with both of his points in his response to my letter on Gordon Brown’s pro-Union speech.
My letter was clear in distinguishing between interest rates and mortgage rates. As Mr Lewis says, central banks are responsible for interest rates. But the interest rate set by the Central Bank is only one of a multitude of variables to have a bearing on mortgage rates, which are set by mortgage lenders based on commercial factors.
Gordon Brown’s claim that, under independence, the rest of the UK would “set mortgage rates” in Scotland is therefore incorrect and misleading.
Mr Lewis then points out that Scotland is running a fiscal deficit, as if I had claimed that it is not. In fact, I agree with him – Scotland and the UK as a whole both have fiscal deficits.
The point is that Scotland’s deficit is substantially smaller in proportionate terms than that of the UK. In other words – exactly as I said in my original letter – an independent Scotland would be better placed than the UK to fund public services, despite Gordon Brown’s attempts to imply otherwise.
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