LAST week the value of the pound took a hit as GDP figures for the first quarter of 2018 were released, showing weaker than expected growth. The Tories blamed bad weather, but closer analysis showed the collapse of Carillion to be a major driver of the decrease. The Tory Government’s botched attempts to privatise public services have led to a premature contraction of the UK economy before the UK leaves the EU.
The slump in GDP appears to have halted what was a heavily implied planned rate increase at next week’s Monetary Policy Committee (MPC) meeting at the Bank of England.
While I appreciate that the MPC doesn’t have a great deal of flexibility, a rate rise now could well be closing the stable door after the horse has bolted, if this trend of lower growth is to continue. If the UK is heading for a downturn – and it’s hard to see how it could be heading for anything else with Brexit looming on the horizon – the Bank of England’s options to stimulate the economy are going to be constrained by the already low level of interest rates.
The time to raise interest rates could well have passed by the time the next set of data is released, and we have a clearer indication of where the UK is heading. Facing the prospect of a hard Tory Brexit, with no trade deal, in under a year, its unlikely to be comforting news.
To compound their mismanagement, the UK Government hasn’t showed any sign of budging over its restrictive immigration policies. In the face of the Windrush scandal and growing public awareness about the senseless treatment of immigrants, the Tories still have immigration targets in place that make no economic sense. The endless anti-immigration rhetoric from Westminster is harmful to the economy. And Scotland will suffer the most. With an ageing population, and limited powers to expand the economy, we need New Scots. Research from the Fraser of Allander Institute anticipates a direct negative effect on public finances post-Brexit because of reduced migration from the EU. It forecasts a 9% reduction in GDP and a 1% reduction in GDP per capita, holding all other factors equal.
It’s now more crucial than ever, for Scotland’s interests to be protected. With the threat of a UK Government power-grab after Brexit, powers which are supposed to be devolved could go to Westminster. Holyrood could be prevented from passing laws to protect some key sectors in the Scottish economy and prevented from having a say on any changes imposed by Westminster. Worst of all, public sector organisations like our NHS could be open to privatisation in return for post-Brexit trade deals and the Scottish Parliament could be powerless to stop it.
There is only one way to protect Scotland from this catalogue of economic failure by Theresa May’s government. It’s time to take matters into our own hands.