World Economy

Scottish Gov’t Needs Strong Plan to Promote Growth, Jobs

Scottish Gov’t Needs Strong Plan  to Promote Growth, JobsScottish Gov’t Needs Strong Plan  to Promote Growth, Jobs

Britain’s Fraser of Allander Institute has just published the first serious impact assessment of Brexit on the Scottish economy. It is a forecast based on a model, so the usual econometric health warnings apply.

Nonetheless it makes for a sobering read. Under a European Economic Area or European Free Trade Agreement scenario, the institute predicts that the economy in Scotland will shrink by 3%, real wages will drop by 6% and 30,000 jobs will be lost, Scottishnews reported.

Under a World Trade Organization scenario, that is, a hard Brexit, the economy is forecast to contract by 5%, real wages driven down by 7% and 80,000 jobs would go.

When the Scottish National Party came to office in 2007, less than a quarter of the Scottish economy was overseas owned. By 2015, over a third (34.6%) was in external ownership. This compares to a UK average of 27%, with the West Midlands, for example, at 30% and south-west England at 20%.

This makes the Scottish economy much more of a branch plant economy than any other part of the UK, and so much more vulnerable to job cuts and closures as a result of external shocks.

The scale of this Brexit challenge, coupled with real unemployment levels above 12%, not the 4% figure claimed by the Scottish government, makes it imperative not that transformative economic change is postponed, but that it is now pursued with renewed vigor.

In particular, it is time to make the case for more decisive economic planning led by the Scottish government. Defensive rescues of enterprises like the Ferguson Marine shipyard on the Lower Reaches of the Clyde, or even entire industries like steel in Lanarkshire, were welcomed right across the labor movement, but it is not enough.

It is time for positive industrial planning and a comprehensive manufacturing strategy. One which recognizes the greater benefits to the Scottish economy of a vibrant and more diverse manufacturing base, and in turn, the much wider export base which could grow from it.

Greater public ownership of transport, renewable energy, local government services, and nationally organized services such as the soon to be devolved Work Program are essential. “But we should go further and start to consider economic planning agreements and public equity stakes to stimulate the wider economy too,” the report said.


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