John Swinney: Prosperity is our key ambition for Scotland

THE Scottish Government’s ambition for Scotland is clear. Faster sustainable economic growth with opportunities for all of Scotland to flourish; a public sector and economy that reflects the unique character, skills and values of the Scottish people; and a nation taking its full place in the international community and global economy.

We therefore face a choice over the future of our nation and how we achieve that ambition. In my view, it is only with full access to job-creating powers and the powers of independence that we can fully deliver these ambitions.

Two weeks ago, output figures for the third quarter of 2011 were published, alongside the latest labour market and export statistics. They showed that GDP grew by 0.5 per cent over the quarter – the same as in the UK – with an upturn in services and continued growth in manufacturing.

Overall, the figures confirm that Scotland’s recession – while deeply damaging – was shorter and shallower than for the UK as a whole. Manufactured exports grew for the third consecutive quarter, while the Purchasing Managers Index for December indicated private sector growth for the 12th consecutive month. Yesterday’s retail sales figures showed growth of 0.7 per cent in the final quarter of 2011 and over the year as a whole.

But economic conditions are challenging. Last month’s labour market statistics show a further rise in unemployment. There are now almost 2.7 million people unemployed in the UK – the highest number since 1994. Scotland’s unemployment rate at 8.6 per cent is slightly higher than the UK’s 8.4 per cent, though we continue to have better employment and economic activity rates.

Tackling unemployment and its devastating impact on families and communities is an absolute priority for this government. That is why we are investing heavily in our young people. These recent trends and the weak growth outlook for this year highlight the failure of the UK government’s strategy.

While I accept the need to address the legacy of debt left by the previous UK government, this can only be achieved if there is sufficient growth in the economy. This is not what we are seeing.

Just last week, the Office for National Statistics published figures showing that output fell by 0.2 per cent in the final quarter of 2011, while the Office for Budget Responsibility forecast that the UK economy will effectively flat-line over the first six months of 2012.

And the result is all the more tragic as the Chancellor’s actions are proving to be self-defeating with borrowing now rising.

There must be an alternative. We have long argued for boosting public-sector capital investment, improving access to finance and encouraging new private investment and enhancing economic security. As the First Minister set out in his Hugo Young lecture last week, the benefits and opportunities from Scotland as an independent country will not be felt just here at home, but for all of these islands.

In recent weeks, we have all been struck by the interest shown in developments in Scotland and the 2014 referendum on independence.

We have spent a great deal of time speaking to overseas journalists and we keep being asked the same question: What are our ambitions for Scotland?

We wish to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. In a global marketplace, where competitive advantage and resourcefulness are key to economic success, countries need a balance of flexibility and stability in economic policy. Independence would allow Scotland to choose the optimal balance of economic policy.

My vision of an independent Scottish economy is one in which monetary policy acts to underpin price and macroeconomic stability, supported by fiscal and economic flexibility to promote growth and create jobs. Price stability is the key to creating an environment that is conducive to trade, investment and economic growth.

Indeed, this is one reason why all major industrialised economies including the UK, the Eurozone, Japan, Australia, New Zealand, Canada and the USA have established independent central banks with the core focus upon maintaining price stability. Scotland would continue with such an arrangement post-independence in a Sterling Zone with the Bank of England responsible for monetary policy.

But monetary policy cannot directly tackle youth unemployment, promote innovation, boost skills, target overseas investment or promote investment in key sectors. To address these issues we need greater fiscal powers and an opportunity to use them.

In an increasingly interconnected world, independence offers an opportunity to put forward a distinct voice in the global economic community. Independence would allow us to maximise the opportunities available to our businesses and our people, to give certainty about the tax environment to our oil and gas industry, to set competitive levels of corporation tax and to incentivise those industries where Scotland already enjoys competitive advantage.

We expect to encourage and support more headquarter functions and the skilled jobs for those who wish to make their careers in a newly independent Scotland. With independence we will have the freedom to pursue those partnerships and make the choices that secure Scotland’s interests, that will transform the prospects for this country.

• John Swinney is SNP MSP for North Tayside and finance secretary in the Scottish Government.