The Institute for Public Policy Research’s scathing report on the UK Government’s economic policies puts it under considerable pressure to increase capital investment in order to stimulate our flagging economic recovery.
With the latest GDP growth figures showing a marginal 0.1 per cent fall in Scotland – compared with a 0.4 per cent drop over the same period for the UK – it is vital that Chancellor George Osborne delivers more capital funding to the Scottish Government for shovel-ready projects.
While latest figures showing that the Scottish employment rate is higher and the unemployment rate lower than the UK average are indeed heartening, the fall in Scottish GDP was entirely driven by a drop in the construction sector, while the services and production sectors continued to expand.
Last week’s downward revision by the IMF to its growth forecast for the UK economy in 2012 to just 0.2 per cent demonstrates that more needs to be done by the UK Government to kick-start the economy in the form of capital investment to stimulate growth and jobs.
The UK Government’s austerity medicine is killing, not curing, the patient, and it is interesting to note that, despite the negative impression given of the economic situation in the eurozone, it still grew at twice the rate of the UK economy last year.
The economist John Maynard Keynes famously said: “When the facts change, I change my mind. What do you do, sir?”
We now need a Westminster U-turn from Chancellor Osborne to acknowledge that the facts have indeed changed, and deliver the increase in capital spending required to make an immediate difference.