21/07/2011 Newsnight Scotland

Mark Lewis, thank you very much for coming in.

disappointing GDP, retail sales and bankruptcy figures. Could the

crisis in our key export market - years since the birth of David Hume.

Why isn't this beacon of the Enlightenment as celebrated as

Robert Burns or Walter Scott? Good evening. We may be feeling rather

neighbours is also a crisis for us. We don't have answers yet and most

of the questions hanging over the eurozone is what eurozone leaders

will claim is a rescue package for the letterbox in a year or so? The

George Osborne may be getting it public sector jobs will be more

than made up for by a rise in employment in the private sector.

to be at least something in that but - and it is a big butt - it all

depends on the growth of exports we continuing. That is where Greece

as we export and the rest of the UK too is highly dependent on

exporting to the EU. In a hugely meaningful way, Britain's growth

strategy works if Europe grows too. It is not Greece itself that is the

wider European banking crisis on exposure to Greek debt, around �9

greater exposure to banks in France and Germany which in turn have much

greater exposure to Greece. That is countries could swamp the

eurozone's ability to bail them out. It would certainly be a huge drag

as certainly, it would trigger banking crisis in Portugal and

Ireland. Something else - a discussion last week about George

Osborne's strategy was tentative. Since then, we have had more

economic data for Scotland and it one-tenth of 1%, way behind the UK

as a whole, but the figures were dreadful enough. Bankruptcies in

Scotland are way up and retail sales down. Take away rising

exports to Europe, the insistent anguished scream. I'm joined once

again by John McLaren from the Regions at Glasgow University and

from Edinburgh by the Executive Jamieson. Bill, I'm curious as to

Christine Lagarde, the new managing director of the IMF assuring us

What is your take on it? Well, what real default - we are all waiting

for the dog that has not yet barked. That is the European Central Bank.

Without some blessing by the European Central Bank on this, this

package could come apart very quickly. The feeling seems to be

that the chairman of the Central Merkel and Nicolas Sarkozy

yesterday. That may be sorted? ahead. Now, this is not the first

time we have had euro crisis to do a bit of patchwork for a few

months and it starts to corrode and fray. So I think the markets will

be quite critical tomorrow. Also whether that confidence can be

quite alarming to see in the eurozone we are seeing signs of

pace of growth. Yeah. What I'm as if it is a matter of opinion. It

is more than that. If the credit agencies deem that this is a

default by Greece, then there are all sorts of pension funds right

across Europe and America that would be required by their own

statutes to disinvest from Greek government bonds. Correct. There is

more riding on this than just whether Christine Lagarde and the

rest believe themselves problem. In terms of getting

private sector support or private sector involvement behind this

package and I wasn't clear from the going to be voluntary or enforced.

enforcement in it and to the extent that that is true, it will be

default. The other thing I wanted to ask you was this. I haven't seen

the final document. I have the an extraordinary paragraph where

they say look, this default which isn't a default, is a default

because it goes on to say all other euro countries solemnly reaffirm

their inflexible determination to honour fully their own individual

sovereign's signature. So they are will be allowed to do that. Given

the events of the last year, is that remotely credible? Well, I did

watch Sarkozy being quite emphatic problem where this is na it will be

seen by other -- that it will be seen by other countries as

precedent setting. Once you have established a precedent, it is very

allowed this for Greece, why will you not allow it for us? The

precedent behind it could be very dangerous here. What do you make of

this, John in? At least in the issues like the phrasing of this

document, this phrase "sovereign is being applied to Greece or not.

They are having to make tough decisions one way or another.

may be a game-changer, but I can't heard in the last year or two that

this is the game-changer and it has never been the complete game-

Sarkozy said once and only once and happen. Now it is once and only

it is not once and only once then because... Look, turn this on its

head. Look at it another way. well during the financial crisis.

Didn't they? No! And they have also European Union decides to run its

affairs. This could be the first organisations saying the rating

be abolished or reformed and not us? I don't think you will find too

many defenders of them so - that should have been done already. To

and change rating agencies, we will do it a different way, it is the

wrong way round. They will be playing catch-up again on this. We

can spell out connections between the local economy and what is going

on there. We need European growth, don't we? The figures we got this

week shows there is not a lot of it happening at the moment? There is

not much growth happening in Scotland. What was disappointing

was the bounce-back from the bad weather that happened in the UK in

the first quarter didn't happen in Scotland. That wasn't due to

manufacturing, they did quite well. Construction fell and public

services, health and social work. 10% of the economy for people but

they don't look at it that way. In the UK that's grown by 5% in the

last year. In Scotland, it has not grown at all. Why is that? Has the

Scottish Government stopped putting money into the Health Service? I'm

not sure. There are these worrying things coming from a number of

different areas now. It is difficult to see where the growth

is going to come from. In terms of Scotland, over two-thirds of its

exports are in alcohol or engineering. That is a pretty

narrow range to have your exports in. So it's still difficult to see

where that spur is going to come from in the Scottish context.

an interesting point, Bill, that one level, obviously, a crisis in

the eurozone doesn't help. We need a growing eurozone to increase

exports. Underlying that, if you like the slightly more medium-term

issues, there are huge question marks over whether the Scottish or

the British economies any longer have the capacity to mount an

export drive? Well, this is one of the worrying features about the

data coming out since the first quarter figures and very little of

it is at all optimistic. The one bright spot that John touched on

was in fact the performance of the Scotland's food and drink

industries. We have gone back to a sort of dependent on agriculture to

see us through this very difficult period. If you are taking a medium-

term view, there were some very serious questions to ask about our

capacity to undertake this rebalancing of the economy, a shift

from consumer demand on to manufacturing exports. And you are

critically dependent on two things. First, as you were saying, the

strength of the European economies, but also you are critically

dependent on a very quick recovery in our banking sector and the

banks' capacity to lend which I don't think will be helped by

today's announcement because it does seem to suggest that the banks

are going to take a hit in some form or another, it may not be a

tax, but they may have to take a hit on their holdings of the

stricken bonds. John, given the discussion we had last week, we

seem to agree that you might, if you are going to have to rebalance

the economy, you might expect retail sales to form. They fell

here, in figures we had this week, they have gone up slightly as a

whole. And you wouldn't expect to see bankruptcies going up by so

much, would you? You would certainly hope not at this stage of

what is supposed to be the recovery. I think in most recessions, large

recessions over the last century, there is quite often a double dip

or a slowdown and maybe that is what we are going through here. The

trouble is... Isn't there also a phenomenon that you tend to get a

rise in bankruptcies and an increase in unemployment just as

the economy is coming out of recession. Banks start calling in

their debts? Typically, GDP starts to recover before employment does.

This has been an unusual one. We will have to leave it there.

Thank you. No doubt Adam Smith would have much to say about the

turmoil caused by the euro, but it is another stellar member of the

Enlightenment who is remembered this week. It's 300 years since the

birth of David Hume, thought by many as the greatest philosopher to

write in English. But as devotees from around the world meet in

Edinburgh to celebrate him, Derek Bateman wonders if Hume is another

of those Scots who falls just below August 29th, 1,776, was a dark day

in Scotland. The life of one of our greatest intellects was snuffed out

and his remains interred. I have always considered him as

approaching to the idea of a complete and virtuous man as

perhaps the frailty of human life will permit. For the Giants of

enlightenment of which David Hume was one, it was time to take stock

of a revolutionary philosopher who challenged organised religion in an

age of unthinking belief, who transformed the history of Britain

into a bestseller and inspired among others Charles Darwin and

James Boswell. Hume's views were atheistic. He said we understood

the world through feelings, not external diktat. The Church of

Scotland tried to ex-communicate him. One of his early works was

published anonymously and he was rejected by both Edinburgh and

Glasgow Universities. It is a sign of his contemporary popularity that

his mausoleum was designed by Robert Adam. Hume's Romanesque tomb

here in Edinburgh is largely forgotten today. Revered by

students certainly, but this is no Burns, Bruce, Scott or Wallace of

popular imagination. A wider audience would benefit from a Scot

whose influence was global and to many is still relevant today. Hume

may have been the shooting star of enlightenment but there was already

a whole Solar System of intellect to be found amongst the courts of

the old town with its clubs filled with debate and sustained by the

best educated peasant class anywhere and the first free-lending

libraries in the world. Mr Hume, come in. You are in time. Just in

time. The role of the female sex in modern life... This is Hume's

autobiography, it is probably the shortest autobiography of a great

man in the English language... The National Library of Scotland has

the most complete collections of his writing. I am or rather was for

that is the style I must use in speaking with myself which "M"

boldens me the more... Academics from around the globe are in

Edinburgh to continue the arguments that raged in the back alleys of

Edinburgh 300 years ago. If not all of Scotland understands Hume's

contribution, they certainly do. You think about what he has to say

about where human action originates, what he has to say about the origin

and morality. We don't just pay attention to reason when we act. It

would have an effect on persons that Tay take Hume seriously in so

far as they think, they would pay more attention to the -- they take

Hume seriously in so far as they think, they would pay more

attention to the human side of life. We could do with more of Hume's

thinking on imagination and him putting imagination at the heart of

the way we respond to life. We have perhaps become almost too ideas-

driven. Hume was a philosopher. He was interested in the world of his

time, the world outside the study, the lecture theatre. He thought

hard about business and commerce and he had serious and pessimistic

things to say about national debt and the political consequences of

national debt and how it can compromise a nation's institutions

and freedoms so he seems to have things to say directly relevant to

the situation of European countries right now. His story may lack the

blood, thunder and romance of other heroes, but Hume offers us a

different vision of the old nation, one of thought and insight which

today could be just as uplifting. A look at the front-pages. Divided

between a couple of stories. The Times leads on the eurozone deal.

Europe hails historic deal to save currency. The Financial Times - a

deal on Greece bail-out. Then in the Guardian, the latest

developments in the News of the World story - James Murdoch lied to