CLINGING ON BY OUR FINGERTIPS DESPITE QUANTITATIVE EASING

BILL JAMIESON

Few tips for healthy living have been more heavily quoted than “You are what you eat”. I was happy to go along with this until a friend popped up with a brilliant idea for publishing a best seller.

“It’s based on ‘You are what you eat’”, she explained. “I’m writing a book about it. It’s called ‘Recipes of The Great Dictators – Eat Your Way to World Domination’”.

How beautifully logical… and how beautifully bollocks. We’re not really “what we eat”. If this maxim falls apart here, might it also be wrong-headed when applied in other areas?

For seven years – long enough for any experiment to prove its worth – central bankers have insisted that if we “eat” enough newly minted money, our fortunes will revive.

Vast piles of this stuff – Quantitative Easing – have been put before the leading industrial economies on the premise that if we eat enough of it we will all recover to enjoy new peaks of prosperity.

We’ve munched and we’ve crunched. But today stock markets are plunging on fears that we’re now addicted to QE. Commentators say America is at risk of a slide back into recession and in the UK growth has slackened.

Here in Scotland the government has gone full tilt for “we are what we eat”. It fed us fit to burst with numbers on North Sea oil riches. It boosted capital spending. It allowed business rates to rise.

And it has gorged itself on its own propaganda. Surely, if it could make enough people believe we’re performing better or stronger than the rest of the UK, then it must come true – we will be what we have been fed.

But now comes a reckoning. Last month GDP figures for the third quarter showed growth in Scotland’s economy slowed to just 0.1 per cent, compared to 0.5 per cent across the UK.

Now we can say that world economy factors are to blame. It’s not just Scotland but much of the industrialised world that is suffering a relapse.

But that doesn’t help explain the difference between UK and Scottish economies. We use the same currency. We operate under the same UK budget and the same UK regulation.

Might it be that in Scotland we are not what the administration is making us eat?

Not that the UK performance is much to write home about. The latest Bank of England forecast for this year is for growth to slow to 2.2 per cent (2015: 2.5 per cent)

Now come further pointers to the Scottish slowdown. The latest monthly survey of managers for Bank of Scotland out yesterday showed growth stuck “in low gear” at the start of 2016 with jobs being shed in both services and manufacturing.

And another survey of business confidence out yesterday, found business confidence at a three-year low, with managers split over whether things would be better six months from now.

The purchasing managers index (PMI), by Markit was just over the 50 mark in January, below which it indicates contraction.
At 50.3, the same figure as December, it continues to show a significant lag on the equivalent UK survey which registered 56.1 – quite a discrepancy.

Scotland, it seems, is hanging on to growth by its fingertips – both on this measure and on the official numbers from St Andrews House. One step down from here over the next two quarters and we’re in recession

This is the background against which Scottish Labour and the Liberal Democrats are proposing a rise in income tax for Scottish taxpayers.

Here, I really do start to wonder if the maxim might after all prove true. If we eat enough of this rubbish, then a rubbish economy is what we will get.

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  Comments: 1


  1. Bill spot on ! Our illustrious leaders at Holyrood will soon be saying Crisis What Crisis as the Scottish Economy under performs for all sorts of well documented reasons . One of them being the constant anti English bilge being pumped out on a daily basis creating antipathy towards all things Scottish from South of the border. We are becoming an investment free zone due to continued political uncertainty. Independence at any price indeed!

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