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Sturgeon falls short on stimulating the economy

Terry portrait with tieNicola Sturgeon has shown a measure of leadership, even statesmanship, in the fevered post-Brexit climate. She has argued Scotland’s case strongly and raised important questions over the vacuum that has emerged.

That’s the good news. Her latest announcement on providing a stimulus package for the economy is little more than a call to arms, rather than a full-blown charge.

The £100 million package of measures is money being brought forward from future accounts. We await the full details, but one thing is for sure: it is unlikely to stimulate the economy in any meaningful way.

As she said herself, there is already £6 billion of infrastructure work under way in Scotland. That is also an admission that if £6bn is not currently stimulating the economy then it is difficult to see what difference another £100m will make.

Ms Sturgeon has always been a politician in a hurry, an attribute she shares with Prime Minister Theresa May. Rushing out this statement of intent therefore comes as no surprise. She not only demands action, she condemns a lack of the same urgency in Westminster. That is to be applauded.

But making a case for action, then delivering so little substance is puzzling. Offering more advice networks and talking shops will not suffice.

It suggests strongly that while wanting to ‘do something’, there is actually little the Holyrood government can do. Even with its new powers it cannot implement the sort of measures it might prefer. It has no control over monetary policy, no ability to influence currency, inflation, interest rates, and so on.

That said, the Bank of England has done much of the heavy lifting in this department and we will have to wait at least a year for the interest rate cut to work its way through the system. It has also run into problems over its new bond-buying programme, thereby indicating an early fault-line in the new strategy.

Ms Sturgeon, however, does have powers that could be used. Unfortunately, it has not applied them to help business, only to burden it with more cost: through higher business rates, for instance.

What is really required is a tangible programme of building work: road maintenance, house-building, and so on.

We must hope that this is what Ms Sturgeon has in mind. But it will mean scraping a few more crumbs from the biscuit tin to make it happen.

 

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