The Tory / DUP Arrangement

I hold no brief for the Conservative Party. However if I were a Labour supporter right now I'd hesitate to accuse anyone too loudly of friendship with terrorists. Pots and kettles spring to mind.

As an economist I'm naturally concerned about the public finances. On the other hand in respect of the agreement between the government and the DUP we are talking about finding an extra £1b over an extended period as opposed to the Labour policy of finding £50b. Unsurprisingly I'm less exercised by the former.

The inescapable fact is still that the crash of 2008 ruined the public finances and since then we've only partially recovered. The National Debt is unmanageably high and we're adding to it every year rather than reducing it. The so-called austerity policy aims for nothing more dramatic than ceasing to increase National Debt by 2025, in other words we're already allowing ourselves another 8 years of living beyond our means for which we expect our children and our children's children to pick up the bill.

I accept of course that some debt-financed public investment will lead to growth, though usually public investment is less productive than private investment. A certain amount of public investment in NI would have been needed anyway in order to maintain a frictionless border after Brexit. At the moment I don't know whether that's included in the £1b or not.

I don't accept that large scale running up of debt to finance public consumption is a wise course. Like any public body the NHS for one has extended its remit well beyond treating and preventing sickness. When we can't pay nurses properly we have no business providing free fertility care for example. A reassessment of NHS priorities is overdue.

The same would seem to apply to local authorities which neglect basic housing yet seem able to finance all sorts of special interest groups.

We don't need more government, we need better.

An Unwanted Record

A standard device for politicians who are asked an embarrassing question is to answer a different one. So when Nicola Sturgeon was asked about the GERS report showing the Scottish fiscal deficit was £14.8 billion or about 9.5% of GDP, larger even than Greece, she replied that the real threat to the Scottish economy was Brexit.

Aye, as they say, that'll be right. Scotland does about 15% of its trade with the EU and about 70% with the rest of the UK. We are happy to contemplate pulling out of the UK and really upset about pulling out of the EU?

As I pointed out at the time, the so-called White Paper Scotland's Future, despite predicting an absurdly high oil price, already predicted a fiscal deficit of £4.6 billion.

Take away the alleged bonus of oil revenues and we now need bailing out to the tune of well over £3,000 per adult per year. Fortunately as part of the UK we don't have to try borrowing that.

Meanwhile the Scottish Government embarks on another round of trying to persuade the voters that independence makes economic sense.

Yes. Quite. And whilst all this is going on, who's minding the store?