Economic crisis needs innovation

We must think outside the box as we prepare to deal with what will be worst recession in living memory

It is of course only on a technicality that the United Kingdom is not already officially deep in recession.

Just how long and deep the downturn might be, and what we can best do to ensure that it is short and painless as possible, are the only questions worth asking when it comes to the economy.

Former UK Chancellor Alistair Darling has warned that the impact of the coronavirus pandemic will be “far, far worse” than the banking crisis of 2008. At the same time, economists are warning that Scotland will suffer more than others parts of the UK, as a dramatic reduction in global travel takes its toll on the North Sea oil and Scottish tourism and hospitality industries.

The truism that extraordinary times call for extraordinary measures applies here.

The furlough scheme introduced by the current Chancellor Rishi Sunak is a good example of how bold and well-calculated action can fend off catastrophe. It has not only protected millions of Britons, at least temporarily, from economic hardship, it has also guarded the UK economy from the gravest risk of total collapse.

The inevitable withdrawal of that aid will be painful for many and raises the prospect of millions being dumped on the dole with bleaker prospects than at any time since the dark days of the 1980s.

The state can no more walk away from these citizens without a second thought than it can continue to bankroll all its current support packages.

That is where further fresh thinking must come in.

The proposal by former SNP MSP Andrew Wilson for the Scottish Government to issue bonds to fund vital support for Scotland’s universities and other key industries which face a desperate outlook shows that no single party has the monopoly on innovative ideas. Indeed, it will be interesting to hear more details of the cure prescribed by Labour’s UK Shadow Chancellor Anneliese Dodds.

Mr Wilson’s proposal, which has the support of the First Minister, is a valuable contribution to this debate. This would be one effective way of ensuring that Scotland receives the kind of targeted support that its hardest hit industries desperately need.

We should not, however, forget that it is only through the support of the Bank of England that any such bonds would raise the greatest potential investment for Scotland.