We have achieved lift-off, according to Mark Carney, the governor of the Bank of England in its most optimistic forecast for six years. Those struggling with debts, falling earnings and zero-hours contracts may not see much to celebrate. But Messrs Cameron and Osborne are confident the economy is riding to their electoral rescue. And on the face of it, there is a lot for Bullingdon man to be bullish about.
The Bank of England revised its economic growth forecasts yesterday to 1.6% this year and a remarkable 2.8% for 2014 – just in time for the 2015 general election. Given the economy has been in near-recession now for fully four years, this is obviously glass-half-full territory. As is reflected in the falling rate of unemployment and the increases in the numbers of people in work. Scotland’s unemployment hasn’t actually fallen, but it is anyway lower than in the South.
Indeed, Scotland continues to recover more rapidly than the rest of the country and almost every week brings encouraging economic news. The latest being the assessment of Sir Ian Wood that some three to four billion extra barrels of oil can be extracted from the North Sea. The issue is not how much value to attach to the oil wealth in the North Sea – £1.5 trillion according to Oil and Gas UK – but how quickly it is prudent to extract it.
We can now see how important it was that Grangemouth was not allowed to close. And perhaps it isn’t so daft for the Clyde to start thinking about building oil supply vessels. But that’s some way off since the next generation of Type 26 frigates has now been secured at Govan without the independence “wrecking clause” urged by Labour MP Ian Davidson. Had these disasters been allowed to happen, business confidence in Scotland would not be as strong as it is.
But before the UK and Scottish Governments start patting each other on the back, a word of caution. All economies bounce back from recessions, and there is evidence this one has been delayed by the government’s austerity economics. The public spending cutbacks almost certainly extended and deepened the recession and opportunities were lost to ignite a recovery by socially worthwhile means, such as cutting taxes on the low-paid or promoting manufacturing investment. The present recovery has only happened because the Coalition has thrown its own austerity to the winds and started pumping public money into the South of England housing market.
Article in The Herald. Click here to read on.