It has taken me a couple of weeks to get through the report of Sustainable #GrowthCommission chaired by @AndrewWilson. It deserves serious debate/scrutiny by anyone interested in public policy in Scotland or wider UK. Some observations. Interested in views. @SGCommission
1. The report draws lessons about Scotland’s policy options and potential using a group of 12 successful small economies as a benchmark. It kills the myth that an economy can be too small to succeed.
2. The authors err on the side of caution when setting out the fiscal framework, so no relying on oil or faster growth to wish away the deficit, just a plan to bring it down by growing spending slower than the economy. This has been criticised, but what’s the alternative?
3. The fiscal maths deserves scrutiny and debate. Two central elements: a fair division of assets and liabilities; and an “annual solidarity payment” to the UK to cover legacy debt servicing and shared services. But unclear if/where oil fits into the asset calculation.
4. The 12-country benchmark shows no obvious link between public spending as a % of GDP and growth performance – public spending is a political choice that is only constrained to the extent that it is underfunded. Successful countries, like Denmark, have high public spending.
5. A balanced set of ideas for the sort of economy that Scotland could be. As for all successful small economies, this centres on openness. But not competing on low taxes. More like Denmark, Finland and New Zealand than Ireland.
6. An emphasis on the advantages of immigration – for growth, for productivity and for the fiscal position. Considerable benefits from encouraging international students to stay in Scotland. An area where there is a clear divide with UK policy.
7. Scotland keeps sterling initially, but no formal currency union. The approach to financial regulation is based at continuity. Six tests for a new currency. All very sensible. But how could a Scottish central bank could provide liquidity support on an adequate scale?
8. Lots of detail on policy frameworks. But perhaps a little too much enthusiasm for setting up new commissions. I like the idea of the “stop strategy” to kill off initiatives once they have served their purpose. Easier said than done. Definitely agree on need for better data.
