In this podcast, Graeme Roy – Director of the Fraser of Allander Institute – and Mairi Spowage – Deputy Director of the FAI – first take a look at the data released today on Scottish economic growth for the fourth quarter of 2019.
Following this is a discussion of the potential economic impacts of Coronavirus and associated policy responses.
We’ve been asked in recent days for our take of the impact of the coronavirus on the Scottish economy.
Of course, it goes without saying that the economy is very much secondary to the health implications and the risks to individuals and families.
So before going any further, it’s important that we take a step back. This is primarily about people – people being ill and not being able to work or because they have been advised to self-isolate; and people not travelling, congregating or spending like they would normally because they are self-isolating or trying to limit their exposure to the virus.
This was one of the most significant UK budgets in recent years – although it has very limited ‘Scottish specific’ implications.
What a difference a decade makes. Less than 10 years ago (in June 2010) George Osborne set out plans for a major fiscal consolidation which aimed to reduce public spending below 40% of GDP by 2015/16. The plans involved reducing the fiscal deficit to 1 per cent of GDP by 2015, as part of plans to prevent the debt to GDP ratio exceeding what was framed as an unsustainable level of 70%.
Today Rishi Sunak commended his expansionary budget which will see the deficit rise to 2.4% of GDP this year whilst the government now seems quite relaxed about a debt-to-GDP ratio stabilising closer to 80% than 70%. And these forecasts were largely made before major concerns about the impact of coronavirus materialised.Continue reading
The Budget has – quite rightly – been overshadowed by the ongoing coronavirus emergency.
At times like this, the normal budget day issues that tend to interest us economists, from Barnett consequentials through to the latest policy initiative or forecasts from the OBR, are very much secondary.
The channels through which the spread of coronavirus can feed through to the economy are complex and wide ranging.
But the Chancellor did caution that we should expect for a ‘significant impact’ on the economy.
Impacts will vary by firm, sector, market-place and supply-chain. The ability of each business to flex their activity over time to cope with disruption will be crucial.
Since February’s Budget, there has been discussion about income tax in Scotland and public spending.
Oddly, the debate was sparked by adverts – rather good ones we might add! – on the Tube promoting Scotland as a place to live.
Some – such as London MP Greg Hands – have responded by arguing that moving to Scotland would mean paying higher taxes.
This has been countered by others who argue that whilst (some) taxes may be higher, the quid-pro-quo for paying more tax is higher public spending and benefits such as free University tuition, more generous childcare, free personal care, free prescriptions etc.
So who is right?
