Scott Macnab: Nicola Sturgeon must face economic slump

Nicola Sturgeon's attempts to make a case for independence will be undermined if the Scottish economy shows no upturn. Picture: Getty Images
Nicola Sturgeon's attempts to make a case for independence will be undermined if the Scottish economy shows no upturn. Picture: Getty Images
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Politicking over a second referendum is ignoring the real problems facing Scotland’s economy says Scott Macnab

When Nicola Sturgeon was grappling for reasons to explain away another bleak picture for Scotland’s economy last summer, she said the oil price crash had left the country in a “state of shock”.

This was last August as the latest Government and Expenditure and Revenues in Scotland (GERS) figures showed that Scotland’s deficit - the annual shortfall between money spent on pubic services and taxes raised to fund them - had soared to a massive £15 billion. Fast-forward seven months and things have turned even more grim with the news that Scotland’s economy actually shrank in the final quarter of last year. Except this time, Brexit gets the blame from the SNP.

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This is an absurd position which defies any logic since the broader economy across the UK - also facing the consequences of Brexit - is enjoying healthy growth.

As our political elite dives headlong into another protracted period of navel-gazing over the constitution, the real issue of stagnation affecting workers and families across Scotland seems to be lost.

What is the point in tackling Scotland’s school attainment gap and churning out a highly educated, degree-laden generation of future workers when there’s no jobs for them?

In the past month alone, we’ve seen the century-old Johnson and Johnson pharmaceutical plant in Livingston announce that it would close with the loss of 400 jobs.

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The same town suffered a double blow with the electronics firm Jabil then announcing within a fortnight it would close with 260 staff axed (not before the US firm secured a whopping £450,000 of Scottish taxpayers cash to help fund an extension of its plant two years back). And the “real unemployment” picture was thrown into sharp focus as it emerged that one in ten working-age Scots don’t have a job.

This figure is twice as high as first thought, as it includes those not seeking a job who may have given up on the workplace.

The SNP says the figure is misleading as it includes the long-term sick and disabled.

But the current approach of the Scottish Government to the economic crisis facing Scotland has been marked by lethargy.

Ms Sturgeon’s cabinet includes both a finance secretary, Derek Mackay, and Keith Brown in the role economy secretary, but it is not quite clear where the buck stops when it comes to tackling the country’s growth problem.

They have both reeled out the nonsensical Brexit excuse in recent months.

You almost wonder if they are using Scotland’s economic ills as an opportunity to excessively demonise the impact of EU departure, and in the process, further their own independence agenda as a means to avoid Brexit.

When Ms Sturgeon met Prime Minister Theresa May in Glasgow last month, she let slip an interesting admission as she briefed journalists afterwards.

What if the UK secures a free trade deal with the EU after leaving? This would mean the “hard Brexit” which has prompted such doom-mongering from Nationalists about the economic disaster awaiting Scotland would be avoided.

Under that scenario, would another independence referendum still be needed? Yes, Ms Sturgeon, insisted.

It’s all about giving people a choice. To cynics, this showed the SNP was always going to use Brexit to push a second referendum all along.

They may even have some justification in doing so given the pro-union camp’s rank hypocrisy during the last referendum on the European issue.

But there’s no justification in hiding behind the Brexit issue to avoid facing up to the stark problems facing Scotland’s economy right now. It’s hard to avoid the contrast with Ms Sturgeon’s predecessor Alex Salmond, who always placed jobs and economic competence at the heart of his administration. One of Salmond’s earliest pledges was to raise Scotland’s growth rate in line with the UK, which he rapidly secured - and it stayed there for most of his time in office.

Ms Sturgeon inherited a difficult situation as the global oil price crashed and the knock-on for Scotland’s North Sea industry was widespread job losses and plunging tax receipts as profits dried up. But you can’t help think that Salmond would have adopted a more high-profile, aggressive approach to confronting the situation.

It’s not hard to imagine Salmond declaring a de facto state of economic emergency to tackle the problem.

No doubt much of the blame would be directed at Westminster failings, but you sense Salmond would have done more to “shake the tree” and produce some kind of action.

The impact of stuttering growth goes beyond jobs. As Holyrood gains new tax-raising powers, the performance of the economy plays a key role in future budgets.

In short, if growth is weak or even decreasing, it means the cash raised for public services like schools and the NHS suffers.

Last year the Scottish economy saw 0.4 per cent growth, compared with 1.8 per cent UK-wide. This is a gap of 1.4 per cent, but the economist John McLaren warned last week that even a gap of 0.5 per cent after five years would see Scotland would lose out to the tune of £370 million under the current system - or £1.5bn under independence.

Is this a priority for Ms Sturgeon? As she comes to Parliament next week to set out the next steps in her stand-off with Westminster over an independence referendum, which few appear to want, it doesn’t seem so. A trade mission to the US last week produced only minor re-announcements of deals which had already been secured and the First Minister used the trip to again push the case for leaving the UK.

But the prospect of securing a Yes vote will suffer with an economy flatlining.

And with a deficit standing at almost 10 per cent of GDP, how will Scotland get back into the EU, which has strict rules stating this figure must be no more than three per cent?

If Ms Sturgeon is serious about having a more honest approach to the case for indyref2, she should set out the tax hikes or spending cuts she plans in order to address the economic difficulties.

Otherwise it’s surely time for ministers to publish a detailed recovery plan which will place growth at top of the political agenda.