The National newspaper in Scotland asked me for a reaction to the news that the UK was in recession yesterday. I had precisely fifteen minutes available to provide it as I was heading for a meeting, and the journalist who asked was not available to talk to. So I wrote this, which then featured later in the day in a National article:
As I predicted during much of 2023, we now know that the UK as a whole was in recession during the second half of that year, and barely avoided it over the year as a whole.
Rishi Sunak promised us that growth was his goal and that he would deliver it. He failed. Worse than that, he was bound to fail because he did not put in place any of the policies required to deliver growth.
Tax cuts can never deliver growth. They just make the rich richer.
Austerity cannot deliver growth. It just crushes public services and the pay of those who work for them.
Interest rate hikes have never delivered growth. They just boost bankers bonuses whilst crushing the wellbeing of those households who have mortgages and those who pay rent.
Pay restraint cannot deliver growth. In fact, it is designed to deliver the exact opposite.
Sunak promoted everything that created a recession. It is not an accident that we have one. It was by his design.
What we now need to deliver growth are three things.
The first is significant new investment by the state in climate change infrastructure, social housing, transport, energy, and the other systems that will transform our economy into the sustainable one that we need.
Second, we need to provide incentives so that households can invest in our future, whether that be by insulating their homes, installing heat pumps, or by  buying electric vehicles.
And, third,business needs to invest to increase productivity, which it would if the government and households were spending, because they would then have the incentive to spend money to transform their business processes.
Rishi Sunak has not hinted that he will do any of these things.
Labour has cancelled its £28 billion plan for green growth.
Both these Westminster focused parties are failing the UK, and neither of them gives a damn about what happens in Scotland.
If Scotland wants growth to exploit the enormous green energy potential that exists within the country then it could have it. That though is only possible if it is freed from the shackles of the Bank of England and HM Treasury in London, which still believes in the policies that delivered the great recession in the 1930s, and might now deliver the great recession of the 2020s.
A Scottish government with its own currency, its own power to borrow, and its own ability to sell the benefits of its own green energy potential could deliver real growth for Scotland. Alternatively, as part of the UK, the current mess will continue.
Scotland has a choice. It should never forget it. Economic recession need never be a part of its future.
And if you want to know why I do not thin k Labour will do that well in Scotland come a general election , that is why. Scotland has other options. The rest of us have fewer.
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Hard to find the right word why the British are so limited in their understanding of how to achieve general well-being for all. Obviously it’s an intellectual back-water when it comes to understanding economics and monetary systems. It has a long history as a democracy of swinging like a pendulum between two political parties that have little understanding of the above. A word for an intellectually stagnate country is needed!
Dimocracy
As we are subjects not citizens, perhaps moronarchy?
“Interest rate hikes have never delivered growth. They just boost bankers bonuses whilst crushing the wellbeing of those households who have mortgages and those who pay rent”.
And, Lo! Nat West profits up 20% to £6.2Bn. Easy money thanks to Bailey; surely so easy they wouldn’t actually dream of taking bonuses for falling off a log?
NatWest profits up by just 20%? They need to talk to British Gas which managed a profit increase of 1043% in a year (and that’s without having the perk that the commercial banks have of receiving interest from The Treasury on the free money from UK Gov QE in their Reserve A/Cs at BoE). Now that’s worth getting angry about!
Unfortunately, it doesn’t matter if Labour do that well in Scotland. Any decrease in the number of seats held by the S.N.P will be hailed by a corrupt media as a disaster for the party, and a death blow to any aspirations of Scottish Independence. It still baffles me, after many years of campaigning, why a goodly number of Scots vote for political parties who are not Scottish, never have been Scottish, and have no interest in improving our country. Why?
According to the most recent IPSOS/MORI poll the SNP only leads Labour in Scotland by 7% for GE intentions.
Yet support for Indy has stayed remarkably constant, throughout the renewal of support for the SLabs. Allowing for sampling errors, Yes is just ahead at 53%. – but this is resilient, being up on Sept 2023 (47%)
If this is sustained into the post GE setting, it is still difficult to pitch it as a disaster for Indy support, though I have no doubt that all the mainstream English unionist parties and Mail will try to present it as such.
Lying about statistics in this way is not merely a Trumpian phenomenon, but we’re not all zipped up the back, and such deception is one reason why politicians as a tribe are so poorly trusted.
Agreed – and this factor shows you that Sunak’s cognition of the issues is still constrained by the culture of investment banking he was part of.
Whatever happened to domain knowledge eh? But if you’re part of a government that has been destroying democracy – the last thing you need to know id what you are destroying – certainly makes it easier doesn’t it?
Can we expect an OBR re calibration later in 2024 “no longer in recession”?
The Bank of England is useless fighting inflation by throwing “petrol” on the bonfire of external inflation and then only delivering a “technical recession”.
Whatever next I wonder?
GDP per capita has fallen for seven consecutive quarters
A new record I believe but you wont hear about it in the MSM