Merry GERS-mas! No, Lionel Messi is not signing for Rangers. GERS day is the geek term for the ultimate geeky day in Scottish politics, where a statistical publication is wielded like a constitutional axe, weaponised as the definitive financial statement of whether an independent Scotland is perfectly viable or a disaster waiting to happen, depending on your tastes.
Government Expenditure and Revenue Scotland takes on an extra twist this year, in that we have a ballooning, historic UK Government budget deficit due to the pandemic crisis, meaning even if (as is likely) an independent Scotland’s hypothetical budget deficit is extremely high, it will be compared to the actually existing Treasury’s actually existing extremely high budget deficit. One would have thought that would take the sting out of the issue for unionists, since the UK Government has not responded to an extremely high budget deficit by turning on the austerity taps, far from it. So why would an independent Scotland have to?
Well, nothing is that simple in GERS world. Danny Phillips of the Institute for Fiscal Studies has said that if an independent Scotland remains predicated on the 2018 SNP Growth Commission report, with it’s aim of using the first per centage point of growth to bring down the fiscal deficit to at least three per cent of GDP, then in fact it would mean deep austerity in Scotland under present conditions. There are some provisions for counter-cyclical spending in the Growth Commission report in a recessionary period, but even then, under the proposals for Sterlingisation, deficit-financing would have to be done in a foreign currency (Sterling), significantly increasing the cost of public borrowing.
As David Jamieson has argued on Source, the Growth Commission report is now the Scottish independence movement’s ultimate hostage to fortune, written just at the end of an era that is now gone – not only is austerity currently out of favour among western governments (for now), sovereign Central Banks have become large, permanent features on the national balance sheet of every country. The notion that a newly independent state could go without such monetary underpinnings is now definitively for the birds.
Take away the Growth Commission report (please), and any unionist attack on an independent Scotland’s prospective public finances is easily disarmed, as either austerity is necessary and therefore it is coming across the UK – something neither Labour nor the Tories (for the moment) want to say – or austerity isn’t necessary and thus isn’t necessary for any part of the UK. All that’s needed is the bravery to say unambiguously that like any sovereign nation-state an independent Scotland would have its own currency.
The quicker we get GERS day over with this year the better, since there is an actually serious debate to be had about how to recover from the enormous economic crisis upon Scotland. On that topic, there is now a burgeoning body of work which is light years ahead of the Scottish Government’s official advisory report. The latest is a superb paper written by Miriam Brett and Laurie Macfarlane, two of Scotland’s best economic thinkers, for think-tank Common Wealth, which makes a series of proposals that if taken up by the Scottish Government in next month’s Programme for Government really would be a transformative response to the crisis.
It is worth reading in full, but I will pick out just two ideas here. With the over-night shift to home-working, the future of commercial property is in jeopardy – what to do with all that office space, falling in value? Brett and Macfarlane propose a public commons partnership between the government and community trusts to transfer under-utilised commercial property into community use, whether it is for social housing or municipal economic projects.
The other idea that caught my eye was for Falkirk bus manufacturer Alexander Dennis, set to cut up to 650 jobs. Brett and Macfarlane propose “a large order of electric buses from the public sector” as part of an expansion of bus services across the country, while the new Scottish National Investment Bank (which Macfarlane was involved in the policy development of) “could be called upon to provide the company with debt and equity to ramp up production to meet this new demand”.
What is clear reading Brett and Macfarlane’s report is that the future of the Scottish economy is not a static thing that can be read-off from a financial statement like GERS – it is highly malleable and subject to a wide spread of possible choices, depending on how we decide to act upon it and in who’s interests. Just as the Growth Commission is just one possible choice for how to approach establishing an independent Scotland, so the official advisory report on economic recovery is just one possible choice for how to respond to the pandemic crisis. Alternative futures are available.
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