THESE ISLANDS RESPONSE TO THE SNP'S SUSTAINABLE GROWTH COMMISSION
23 July 2018
These Islands’ major new paper highlights flaws in the SNP’s Growth Commission Report, and argues that it actually strengthens the economic case for Scotland remaining in the UK.
Press Release
In a major new paper to be published at 9am on Monday 23rd July, pro-UK think tank These Islands offers a detailed response to the SNP’s Sustainable Growth Commission report.
These Islands believes that the debate about the constitutional structure of the United Kingdom must be about much more than economics, but also that economic arguments must be fairly and honestly presented. In this spirit, whilst welcoming many of the Commission’s ideas for growth, this paper scrutinises and challenges the report’s recommendations.
According to the report’s author, These Islands chairman Kevin Hague: “Our paper shows that the SNP’s Growth Commission report is objectively more optimistic than the 2014 White Paper, not more realistic as has been widely claimed. In fact the Growth Commission’s report contains highly misleading analysis, fails to address the key economic questions and – we presume unintentionally – actually strengthens the economic case for Scotland remaining in the UK.”
Peer-reviewed by the These Islands Advisory Council and several respected economists, the paper makes nine observations that challenge the way in which the Growth Commission’s work has been presented:
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The report does not make a case for small advanced economies being intrinsically superior to larger ones
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The ‘growth potential’ claims made are unrealistic and based on misleading analysis
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By failing to compare independence with any other scenarios, the report fails to make a case for independence
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Far from being more realistic, the report is objectively more optimistic than the 2014 White Paper
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Claims that the economic model proposed is ‘anti-austerity’ do not stand up to scrutiny. If the Commission’s first Fiscal Rule had been applied over the last decade, Scotland would have seen spending reduced by c.£60bn
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Even then, the Commission’s first Fiscal Rule (to get below a 3% deficit within a decade) is not sufficiently aggressive
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The report doesn’t attempt to model the likely impact of its recommendations
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The report’s currency recommendation is symptomatic of the weakness of the economic case for independence
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The Commission, by implication, makes a strong case for Scotland staying in the UK
Responding specifically to claims that the Growth Commission “rejects austerity”, the paper notes that had Scotland been independent and following the Growth Commission's recommendations, public spending would have been £58bn - £66bn less than actually occurred over the last decade, and in 2016-17 Scottish spending would have been £8.4bn (11.8%) lower. Furthermore, applying the Growth Commission’s recommendations to Scotland’s future (under the assumption that it becomes independent in 2020-21) would be likely to lead to austerity far greater than anything Scotland has recently experienced (or is forecast to experience within the UK).
Reviewer Comments
“I fully concur with this paper's evidence-based analysis and critique of the underlying economic and spending assumptions and conclusions offered in the Sustainable Growth Commission report” – Professor Brian Ashcroft, Emeritus Professor in Economics, University of Strathclyde
“This is a very helpful and objective analysis of the Growth Commission report's attempts to side step key issues regarding the macroeconomics of independence.” – Professor Ronald MacDonald, Research Professor of Macroeconomics and International Finance (Economics), Adam Smith Business School, University of Glasgow
“The Growth Commission seems to rely on an overly optimistic economic assessment. The reality is that the links between Scotland and the UK are much deeper that those between the UK and the EU.” – Sir Andrew Large, Former Deputy Governor for Financial Stability of the Bank of England and member of the Monetary Policy Committee
“This important paper constructively examines the recommendations of the Growth Commission by taking a thorough look at the numbers. What emerges is in fact a strong, positive argument for the continuation of the UK as the best solution for the Scottish economy.” – Brian Quinn CBE, Former Honorary Professor of Economics, Glasgow University and Former Acting Deputy Governor of the Bank of England
“The SNP’s Growth Commission deserves careful and critical scrutiny, as we have to assume it would be the economic plan of an independent Scotland, and this paper is an important contribution.” – Professor Jim Gallagher, Visiting Professor, University of Glasgow, Associate Member, Nuffield College, Oxford
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