Structural problems of UK economy and Brexit inflation blamed for slowdown
EVIDENCE is mounting that Scotland is on the verge of recession, prompting demands for immediate action by the Scottish Government.
The Fraser of Allander Institute has released a report warning that the Scottish Economy is in a “precarious” state, lagging behind the rest of the UK and may have already entered a recession.
The report comes ahead of the release of official figures next week and comes just days after a warning by former OECD economist and expert on the Scottish economist Margaret Cuthbert that the country was “likely” to enter negative growth “soon”.
The Scottish Government has repeatedly warned of the economic fallout from Brexit, which has driven-up prices in recent months amid the fourth pay squeeze in a decade.
Read more – Margaret Cuthbert: Scotland ‘very likely’ to enter recession soon
But problems structural to the UK economy, such as chronic under investment, are also being blamed by economists.
Economist Laurie McFarlane called for the establishment of a Scottish National Investment Bank (SNIB), to provide loans to small businesses at low rates of interests.
He said: “With low levels of investment now pushing Scotland’s economy to the brink of recession, the need for fresh thinking is greater than ever.
“A new Scottish National Investment Bank would channel billions of pounds of low-cost investment to the areas of the economy most in need. In doing so, it would boost productivity, expand the business base, support the creation of thousands of new jobs and generate billions of pounds of savings for the public purse.”
McFarlane helped to draft the Blueprint for an SNIB report for the Common Weal pro-independence think tank and the New Economics Foundation.
Read more – Blueprint for a Scottish National Investment Bank
The SNIB policy was backed my the SNP membership at their 2017 national conference in Aberdeen.
Labour leader Jeremy Corbyn campaigned on the SNIB policy in Scotland during the General Election campaign that saw Labour win seven seats, up from just one in 2015.
Common Weal head of policy Ben Wray said: “The Scottish Government desperately needs a new financial mechanism to boost investment, because we know the UK Government under the Tories aren’t going to do it. A Scottish National Investment Bank is the most direct way to do this on a big, multi-billion pound scale.
“We estimate it would be possible for the Scottish Government to establish a bank of proportionate size to the German KfW, which is the fifth biggest capital issuer in the whole of Europe.
“A bank of this size could finance the creation of high-pay, quality jobs in the productive sectors of the future, like renewables, advanced manufacturing and zero-carbon house building. This could turbo-charge the Scottish economy and kick-start a new era of green reindustrialisation.”
Read more – Leading SNP activists call for Scottish Government to adopt ‘Renew’ leftwing platform
Since the General Election, and ten years since the SNP won the 2007 Scottish election and formed their first government, leading figures on the left of the SNP have called for support for a new ‘Renew’ platform of leftwing policies – including the SNIB.
Another recession would confirm the analysis of theorists who argue that much of the post-industrial world has entered a period of long term low and unstable growth.
Unique among the major economies of Western Europe, the UK has not translated economic recovery since the 2008 crash into imporved living standards. UK average wages fell by 10.4 per cent between 2007 and 2017.
Picture courtesy of Howard Lake
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