26/07/2011 Newsnight Scotland

On Newsnight Scotland: What do today's desultory growth

figures tell us about how the economy is doing here?

Could you feel more British in an independent Scotland?

We talk to the politician who thinks you could.

Good evening. Now, as you may just have seen on

Newsnight, today's figures show that the UK's economy pretty much

flat lined in the second quarter of this year. Last week we had figures

showing Scottish GDP for the first Gross Domestic Product is a measure

of the performance of the hole economy, all the goods and services

produced in a certain period, it is used to judged whether the economy

is growing or not so in these post recessionary days, it is more

politically sensitive than usual. The UK figures come out soon after

the relevant quarter. In January to March, the British figure was 0.5%.

That was not seen as a strong performance, but at least it didn't

fall as it had in the previous quarter. Coalition politicians had

been hoping that April to June quarter would show a strengthening

in growth, with all the associated political benefits. Opponents

including Labour and the SNP say today's weak figure of 0.2% suppose

their argument the Osbourne economic policies is just wrong and

something new needs to be done to inject more growth into the

I'm joined by Professor Brian Ashcroft of the Fraser of Allander

Institute. If we had 0.5% growth and that's gone down to 0.2% and

that went down, it would look grim, wouldn't it? Well, it is worrying

for Scotland. There is no doubt about it. It is worrying for the UK.

It is worrying for the world economy. What we are seeing at the

moment is essentially the developed parts of the world economy is

poised between a situation of recovery and a situation of

prolonged stagnation. That's the situation that we are at the and

the the significant happenings in Europe and the USA which makes a

weaker recovery less stronger than it once was and that's quite

worrying. You heard politicians talking there

about this. It is not that important, is it, whether even you

got a cut in GDP over three months or whether it is 0.4% or 0.5% or

0.2%, the basic point is we are years after the depth of this

recession and not much is happening? Not much is happening.

The national shoot in London are predicting the UK will return to

pre-recession level after 60 months. That's longer than the great

depression. It is longer than the recession in the 1980s. Scotland's

recovery is weaker. It could be longer for Scotland. Why is this

so? Because of the nature of this great recession we have just gone

through driven by a housing bubble and a banking crisis and the

evidence is that the banking crisis caused recession takes longer to

unwind than other recessions. On top of that the UK and Scotland and

the USA had a problem in that its households were indebted and they

have had to adjust considerably to the effect of the credit crunch,

unwin their personal balance sheet and spending has been reduced

considerably and its con consumption that's failing to

recover. It is the same for Scotland.

Is there a case for trying something else whether you call it

a Plan B or not? Well, I think there is. I do believe, and I have

said this before, I think there is a case for a tax cut. I think there

is probably a case for a tax cut that gets closest to those with

least incomes. It is probably a VAT cut. I don't agree with a cut in

the 50 pence rate for the reasons that the rich are unlikely to spend

it. There is a case for a VAT cut. The other problem is that we talk

about the prospect of quantitative easing and I think we will get some

and I would welcome that. The problem is for technical reasons,

we have a rate of interest which is virtually zero. In those

circumstances, printing money will tend not to have much of an impact.

It won't have an inflationary effect. As economist call it, we

are not close to a liquidity trap. In order for this to work, it has

to push up asset prices. There is a little bit of evidence that

financial asset prices did go up following the last last

quantitative easing, but we know the recent data on bank money show

that it is falling and that's incredibly worrying.

An obvious point given we have good figures or the UK and Scotland for

employment and unemployment over the past few months and given that

we have discussed before why it is that unemployment didn't up as much

as it did in shallower recessions. Does it really matter what happens

to growth as we are as George Osborne claims, as Michael Fallon

was claiming the UK has five million jobs more than last year.

Well, we are creating jobs and that's the other side of the coin

to suggest that it is not wholly bleak. Unemployment and employment

lag on output and we are seeing the nature of employment creation in

Scotland particularly less to an extent in the UK is moving more

towards part-time employment and away from full-time employment. The

amount of labour labour service that is expanding is less in the

job numbers imply and many are on temporary contracts as well. We

also expect for Scotland towards the latter part of this year we

expect unemployment to rise again because Scotland has done well. Its

unemployment tended to fall and it moved closer to the United Kingdom,

but I would expect with growth of 0.1% in the first quarter, probably

flat lining growth in the second second quarter in Scotland, we are

going to see unemployment rise in Scotland. There is a big unknown

about where we are going to go after that. Are we going to flat

line for ten years like the Japanese did at the end of the

1980s or or will we recover which is what we are forecasting, but it

is not certain. Your latest forecast in the light

of what happened since you made that forecast, is that sustainable?

No, we think it is still possible. So we are not going to change it.

The UK economy grow 0.7% over the last year. Most UK forecasters are

around about 1.3% for this year. We are still hoping that there is pick

up, but obviously it is uncertain. Now, it may be getting precious

close to the journalistic silly season, so it wasn't too surprising

to read headlines saying that making Scotland independent would

make people here feel more British. But the idea comes from a prominent

nationalist MP. Is he on to something? We'll hear from him and

a political opponent shortly. First, What makes asked the British Isles?

Is it bulldogs, the Beatles, Burberry raincoats or bright red

postboxes? The backdates, Balmoral or even the British Army?

Fundamentally, the thing that makes us the British Isles is the union

of the Crown's. So people of Queen's Park in Glasgow, do you

feel British? To me, Britishness is English. It derives from England,

for me. I think that is Britishness. So, do you feel more Scottish?

Scottish tour through. I would call myself Scottish, but as a part of

Britain. We're quite lucky in that we can have dual identity. I have

live in England will and although it was different I did not feel I

was in a foreign country. So both, definitely. One thing that unites

the country when they get this whether his we certainly make the

most of it. But at the centre of this debate is the notion of

identity, and the prospect of constitutional change. Can you feel

British and Scottish? Antennae for British and still want

independence? -- and can you feel British. Of course, the two of them

can logically co-exist. But how many people in Scotland think that

way? Many people in Scotland feel the Scottish sense of identity and

the British sense of identity. If you give people both options,

around a third will spontaneously say they are both Scottish and

British, and if you put the issue to them more director, at least

two-thirds will choose some combination of being Scottish and

British. Having said that, what is Clare is that for most people,

their sense of being Scottish is more important than their sense of

being British. And this is the very man who started this debate.

Appearing on a very British institution. Pete Wishart of the

SNP, formerly of run rate. He may have appealed to an audience back

and, but has he got it all wrong this time? Those people who feel

most strongly Scottish sure most in favour of independence, but what is

also true is that even amongst those people who say they are

Scottish and not British, less than half favour independence. The SNP

her going to get a much and it -- majority for independence, but they

have to feel those people who deal prematurely Scottish to back the

idea. So what will happen if or when are Kingdom is no longer

United? Will it increase our fondness for all things British, or

will we leave that identity behind and be happy to go it completely

alone? I am joined now by the S N P MP,

Pete Wishart, and by the deadly leader of the Scottish Lib Dems, Jo

Swinson. -- deputy leader. I bet you are missing those leather

trousers! I have to say, no I am not! Give us the short version.

come from Perth, saw them as much British as somebody from Copenhagen

or Stockholm were Scandinavia. Britishness is a curious and very

difficult concept. There are some excruciating attempts to define it

and categorise it over the past few years, Gordon Brown and Michael

Portillo's attempts. But there is no doubt that people do feel

Scottish and British, even in Scotland. What we can do with

independence is enhance that relationship. People will still

have all those cultural ties, but we can write a new chapter based on

equality and mutual respect. I think we can enhance British

institutions. It could be better. It sounds a bit like a trick ticket

people in Scotland on that they can be British, but they will not

actually be in Britain. It is no trick. People do feel British in

Scotland and what we want to try and do is ensure people can

continue to feel British. If the see themselves as primarily

Scottish, that is OK as well. These ties will also be enhanced because

we will be approaching these arrangements with a new sense of

equality and a real sense of mutual respect. That can only be good.

do nothing Jo Swinton appeal -- agrees. I am afraid not. Lately of

the is the, it's got and separates from the rest of the UK, the

concept of Britishness becomes very much a historical concept. How many

people in Slovenia still talk about being Yugoslavian? That would be

what it would become. Something in our history. There are many people

who do not want Britishness to be something that is just historic. We

would not have British Army or British embassies abroad. A lot of

things that make up Britishness just would not exist any more as a

result of Scotland separating. I do not think the SNP can have it all

ways. Campaign for independence as much as you like but do not try to

say you can have your cake and eat it and have a separate Scotland

that was somehow still be British. I'm getting confused now about what

the SNP mean by independence. I am not sure whether Jo Swinson said is

right. We did we have the British Army and some of the kind of

articles that some a few people have been writing? What we will

definitely have is a whole range of British institutions, and new

British institutions. The British armed forces, for example? Like

immigration, we would have to have some kind of cross border court --

Corporation. But because we will be independent, we will come to the

table and put forward our case, structural depopulation, whereas in

England, the population is over cooking. We will not be ignored.

Out of curiosity, in this new relationship, would we have the

British welfare system? I would hope not. I would think we can do

this ten times better. So this other... The sort of stabilisers

that work in the economy at the moment, people in the areas of the

UK where it is lower, effectively subsidise that and vice versa, that

would not work? I do not know what you are getting at. All I can say

is when we become independent, we will have cross-border institutions.

I am happy for them to be called British and I think that is fine.

We are geographically British. I cannot see a problem with

continuing and constructing new institutions. Approaching that the

the new political arrangement, we can enhance that. The problem

fridges, laugh if you like, but Pete we shirt and some others, at

least they are trying to address this at that and the level. I am

not sure people like you, who or against independence, are actually

coming up with many arguments other than just saying, oh, rubbish.

we are to have the discussion about the real issue of the independence,

that is different from the discussion about whether you can

have a separate Scotland that is also British. But I think the fact

the SNP are bringing forward these arguments is to cloud the real

issue. We have been talking about is confused set of things, we did

beat the British Army or the British welfare system, what with

the costs be for our education system, what would our share of the

deficit be? The SNP has had decades to put together their plans as to

what this would be like, but they cannot answer these questions. If

we're going to have a debate, we need to have those basic building

blocks of information. I do not want to put words in his nose, I

think the point he is tried to make is that it is not unreasonable,

there is no logical reason why an independent Scotland could not

still feel British, and there could be a whole network of civil society,

rather than political relationships, between Scotland, England and the

rest of the UK. If you look at other countries around the world, I

do nothing those all ties have been maintained. You would still have

the heritage, but what would happen I think, England and people in

England would start to use the English identity Farmoor. So on the

other side of the border, the whole Britishness concept would start to

break down as well. That is fine for people who would like to see

that happen. But I do not like this rosy picture that somehow all that

Britishness would somehow carry on. The obvious riposte is to say, the

easy way of being British and Scottish, just be part of Britain.

But we can have something better. We will continue with all these

fantastic social ties, the cultural inheritance that Jo Swinson is

talking about, that is part of my history as a patriotic Scot.

are both good to have to come back and continue this some other time.

-- going to have to come back. This is a Scottish figure,

That is all for tonight, I am back The western side of the UK saw the

sunniest weather yesterday and that is where we start in the morning.

Giving more cloud for central and eastern areas of England. Sunny

spells and Scotland. Rain will arrive in Northern Ireland and the

Western Isles. Northern English be dry with some sunshine, it may

brighten up to the east of the Pennines. The odd shower feeding to

the east of London. The chance of seeing some sunshine as you have

further west. It should be a fine day in the south of England. 23 or

24 Celsius. Quite pleasant when the sun is out. Some patchy cloud, and

in Wales in the afternoon, but still some sunshine. For Northern

Ireland, after a bright start, cloudy over from the West and we

see drizzly rain heading towards Belfast. By that time, some rain

heading into the west of the mainland of Scotland, and ahead of

its, some sunshine. 24 Celsius in the Moray Firth. That is the city

forecast over the next couple of days. Wet weather arriving in

Belfast. It turns DUP in Edinburgh and Inverness by Thursday. But try

for the South across England and Wales. Not a great deal of sunshine