Economic experts warn against austerity

There are fears that the next Budget will put Scotland's recovery at serious risk


The chancellor risks Scotland’s economic recovery if he continues with his austerity agenda in July’s budget.

That’s the warning in the latest commentary by the University of Strathclyde’s Fraser of Allander Institute, produced in partnership with the accounting firm PwC.

In a note of optimism, it observes that growth in the Scottish economy ‘is being fuelled by a combination of capital investment – particularly infrastructure spending – and consumer spending.’

But as the chancellor puts his finishing touches to his emergency budget, due to be held on 8 July, the authors of the commentary warn of ‘threats to recovery’ which include ‘the UK government continuing, or even tightening, planned austerity measures in the forthcoming Budget’.

It notes also that the threat of a Greek exit from the Euro runs ‘the risk of contagion to other economies including Scotland’.

The Institute also warns abut the sustainability of recent growth, arguing that it is

“being threatened by a combination of unbalanced growth that relies unduly on household spending that depends mainly on rising and potentially unsustainable personal debt, and the UK’s overall weak trade performance.”

The Institute forecasts GDP growth of 2.5 per cent in 2015, 2.3 per cent in 2016 and 2.3 per cent in 2017, slightly less than its forecasts in March.

‘The downward adjustment’, it notes, ‘reflects the evidence of a slight slowing in the recovery in the first half of 2015’.

Commenting on the analysis, Brian Ashcroft, Emeritus Professor of economics at the University of Strathclyde, said:

“In his forthcoming Budget, it is crucial that the chancellor takes action to minimise the threats to the recovery by encouraging productivity and real-wage enhancing investment.

“He should also consider increased incentives to exporters and, at a minimum, a slowing in the pace of his fiscal consolidation plans.”

Meanwhile Paul Brewer, government and public sector partner for PwC in Scotland, warned about the forthcoming vote on the UK’s membership of the European Union:

“As 2016 and the referendum loom, so-called ‘Brexit’ will become a concern, particularly for the financial services sector.”

Ed Jacobs is a contributing editor to Left Foot Forward. Follow him on Twitter

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10 Responses to “Economic experts warn against austerity”

  1. stevep

    The Tories have never given a stuff about Scotland. Only recently has it become useful to their ends, using it as a political football to encourage Scottish Nationalism to divide the left in the UK.
    They hope now that their Machiavellian ploy has succeeded, Scotland can be “put back in it`s box again” as one minister said.
    There is next to no chance of Scotland wanting to “go back in it`s box” to suit Westminster and every chance it will want to develop closer links with the EU and eventually leave the UK.
    I expect all those proud “British Bulldog” Tories with their Winston Churchill speeches cd`s and Margaret Thatcher pictures framed on their walls won`t be rushing to hang another picture, that of The UK staggering around like a punch-drunk, once great, boxer with David Cameron landing the final blow that sends it to the deck.

  2. steroflex

    Reassure me.
    Is all this complaint about austerity anything to do with bureaucrats – library staff, teaching assistants, lower civil servants, police support officers – among whom women with second or part time jobs are strongly represented – fearing for their salaries? It masquerades as concern for the vulnerable. All the above are heavily unionised and the Unions are the paymasters. I wonder how many of them are really vulnerable?
    We all know that the national debt has doubled over the past five years, so the word “austerity” is completely off beam.

  3. Keith M

    The Tories don’t give a stuff about anyone except the rich. What the hell did those misguided voters do to put this scum back in.

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  5. Faerieson

    Much like Greece in Europe, it is important to those undemocratic factions that Scotland in the UK is prevented from widening the debate on austerity.

  6. Pete

    They read The Sun, Daily Mail, Telegraph, and watched those sh*te benefits tv shows, which by the way happened to be on immediately after the election tv debates.

  7. Faerieson

    What, another advertising opportunity? Seriously! LFF needs to stamp this out, asap!

  8. blarg1987

    If we are being being honest, everybody has a vested interest.

    That being said, I would be more concerned with organisations and individuals who are calling for a smaller state. Not to benefit us, but to benefit themselves in state asset sell off that would cost us more to use those services down the line then if they had been left under state control.

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