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Scotland: UK government’s measures could lead to loss of £100 billion

Staff writer ▼ | March 15, 2016
The UK government’s fiscal consolidation programme has already led to an estimated 5% fall in UK GDP, Deputy First Minister and Finance Secretary John Swinney of Scotland has warned Chancellor George Osborne ahead of this week’s UK Budget.
John Swinney
Austerity   Five percent fall in UK GDP
Swinney highlighted an independent study by Oxford University Professor of Economic Policy, Simon Wren-Lewis, which found that the impact of the UK Government’s fiscal consolidation programme, and the subsequent delayed recovery, could be a £100 billion loss.

Professor Wren-Lewis has subsequently reported that, even following the upward revision to GDP, the UK’s growth performance has been poor, at a time when the economy has been recovering from a deep recession. During this stage of the economic cycle, per-head growth rates would usually be expected to be well in excess to those that have occurred,

Swinney has written to the Chancellor highlighting the research and calling on him to end the “damaging and needlessly restrictive” adherence to his fiscal rules and reminding Mr Osborne of the Scottish Government’s alternative to austerity, which would balance the current budget and release around £150 billion for investment.

The Deputy First Minister also used the letter to reinforce his call for greater help for the North Sea Oil & Gas sector, action to tackle fiscal barriers to exploration in the North Sea, an easing of the tax burden on the industry, improved access to decommissioning tax relief and urgent consideration of non-fiscal support, such as government loan guarantees.

And he asked that Mr Osborne highlight the joint aim of both governments to reduce rail journey times between Scotland and London to three hours or less, and free up more capacity on the network.