The Scottish Government’s ambition for Scotland is clear –
- Faster sustainable economic growth with opportunities for all of Scotland to flourish.
- A public sector and economy that reflects the unique character, skills, and values of the Scottish people.
- And a nation that takes its full place in the international community and global economy. We therefore face a choice, to be debated between now and autumn 2014, over the future of our nation and how we achieve that ambition.
We therefore face a choice, to be debated between now and autumn 2014, over the future of our nation and how we achieve that ambition.
In my view it is only with full access to job creating powers, and the powers of independence that we can we fully deliver these ambitions
Two weeks ago, output figures for the third quarter of 2011 were published, alongside the latest labour market and export statistics.
They showed that GDP grew by 0.5% over the quarter – the same as in the UK – with an upturn in services and continued growth in manufacturing.
Overall, the figures confirm the economic fact that Scotland’s recession – while deeply damaging – was both shorter and shallower than for the UK as a whole.
Manufactured exports grew for the third consecutive quarter, while the Purchasing Managers Index for December indicated private sector growth for the 12th consecutive month.
Yesterday’s retail sales figures showed growth of 0.7% in the final quarter of 2011 and over the year as a whole despite challenging trading conditions.
Contrary to the headlines, there are positive developments out there.
But the economic conditions are challenging.
The most recent labour market statistics published last month show a further rise in unemployment.
There are now almost 2.7 million people unemployed in the UK – the highest number since 1994.
Scotland’s unemployment rate at 8.6% is now slightly higher than the UK’s 8.4%, though we continue to have better employment and economic activity rates.
But we must not forget the reality behind the statistics. Tackling the scourge of unemployment and its devastating impact on families and communities is an absolute priority for this Government.
That is why we are investing heavily in our young people.
These recent trends and the weak growth outlook for this year highlights the failure of the UK Government’s economic strategy.
I have argued before that, while I accept the clear need to address the legacy of debt left by the previous UK Government, this can only be achieved if there is sufficient growth in the economy.
This is not what we are seeing.
As many economists, such as Professors Paul Krugman and Joseph Stiglitz, have argued, removing public sector demand so rapidly, and before private sector demand was sufficiently strong to step in, has not put fuel into the tank of the economy – but has instead forced it to run on empty.
Just last week, the Office for National Statistics published figures showing that output fell by 0.2% in the final quarter of 2011, while the Office for Budget Responsibility forecast that the UK economy will effectively flat-line over the first six months of 2012.
And the result is all the more tragic as the Chancellor’s actions are proving to be self-defeating with borrowing now rising.
There must be an alternative.
We have long argued for a distinct approach focussed upon 3 key initiatives –
- boosting public sector capital investment;
- improving access to finance and encouraging new private investment;
- and, enhancing economic security.
In my speech this evening I will develop a theme of Scotland’s role in the global economy and highlight the opportunities that will arise following independence.
Central to this is my firm belief, set out clearly by the First Minister in his Hugo Young lecture last week, of the benefits and opportunities from Scotland taking on the responsibilities of an independent country not just here at home but for all of these islands.
I wish to share our vision for the economy of an independent Scotland, the structure we propose, the monetary union that would remain and the benefits to both the Scottish and UK economies that would come from these arrangements.
In recent weeks I think we have all been struck by the interest that has been shown in developments in Scotland and the 2014 referendum on independence.
At last week’s Referendum launch we were joined by over 45 journalists from 17 countries all reporting back on developments in Scotland.
We have spent a great deal of time speaking to overseas journalists interested in learning more about what is happening in Scotland. In these interviews we keep on being asked the same question –
What are our ambitions for Scotland?
It is this question which must frame any debate on what economic powers are most appropriate for our Parliament.
The Scottish Government has a clear ambition for Scotland.
We wish to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.
In a global marketplace where competitive advantage and resourcefulness are key to economic success, countries need a balance of flexibility and stability in economic policy.
Independence would allow Scotland to choose the optimal balance of economic policy.
My vision of an independent Scottish economy is one that in which monetary policy acts to underpin price and macroeconomic stability, supported by fiscal and economic flexibility to promote growth and create jobs.
Price stability is the foundation for a stable and successful macroeconomy. It is key to creating an environment that is conducive to trade, investment and economic growth.
Indeed this is one reason why all major industrialised economies including – the UK, the Eurozone, Japan, Australia, New Zealand, Canada and the USA – have established independent central banks with the core focus upon maintaining price stability. Scotland would continue with such an arrangement post-independence in a Sterling Zone with the Bank of England responsible for monetary policy.
But monetary policy is a blunt tool for tackling most other economic policy demands.
It cannot be targeted to directly tackle youth unemployment, promote innovation, boost skills, target overseas investment or promote investment in key sectors. To address these issues we need greater fiscal powers and an opportunity to use these powers smartly and effectively.
In an increasingly interconnected world, independence offers an opportunity to put forward a distinct voice in the global economic community and to market our strengths.
Independence would allow us to maximise the opportunities available to our businesses and our people, to give certainty about the tax environment to our oil and gas industry, to set competitive levels of corporation tax and to incentivise, those industries where Scotland already enjoys competitive advantage. In a vibrant global economic climate we expect to encourage and support more headquarter functions and the skilled jobs for those who wish to make their careers in a newly independent Scotland.
With independence we will have the freedom to pursue those partnerships and make the choices that secure Scotland’s interests, that will transform the prospects for this country and our ability to contribute to stronger economic performance.”