It’s really not that stupid – but we’ll all pay price for failure to care for the economy

IT’S the economy, stupid. This year marks three decades since this, the most oft-quoted political phrase of modern times, was coined by the American political strategist James Carville.

His point, directed at colleagues on the 1992 campaign to elect Bill Clinton as US President, was that, whatever they considered the most interesting and relevant issues, it was nickel and dime questions on growth and wealth creation that really mattered to the great American public.

Thirty years on, I can’t help but think Mr Carville’s words need to be shouted loud and clear into the faces of our political masters in the UK.

The cost of living crisis is biting hard. Behind it, recession looms. Only yesterday, an influential survey of more than 1,000 British companies suggested growth has already ground to a halt. The sugarrush high as we emerged from the pandemic a few months ago now feels distant. Instead, broken global supply chains and the war in Ukraine have combined to put the skids on our recovery and brought a surge in inflation. Consumer confidence is collapsing.

A long period ahead with no wage growth and no extra funds for public services is looming. Yet, in Scotland, we have a government driven by a First Minister with no plan for growth, focused only on her monomaniacal pursuit of an independence referendum.

At Westminster, it is little better, as Boris Johnson and Rishi Sunak dither over exactly how to respond. Search for a long-term strategy that might help restore tolerable levels of growth and you will, I am afraid, go emptyhanded. We need a plan, stupid; and neither of our governments seem to get it.

Listen to the plaintive voices of business leaders who responded to a survey published this week by the Centre for Policy Studies.

Started in the 1970s by Margaret Thatcher, the think tank takes an unapologetic pro enterprise stance on the issues of the day. It spoke off the record to more than 100 top CEOs, entrepreneurs and funders – who deal in trillions of pounds – on their assessment of the direction of Britain plc.

The good news is that they see the UK as ‘still a more attractive place to do business than its European counterparts’.

But, the report added, the view from boardrooms is that ‘we have been losing ground’ and have ‘become too reliant on, and complacent about, our existing advantages’. The report concluded: ‘If the Government has a story to tell investors about why postBrexit Britain is the best place to come, it is not one that enough of them have heard.’

Failed

One telling anecdote emerged from their interviews: if a CEO was thinking about investing in France, they barely had to touch down at Charles de Gaulle Airport before President Macron was on the phone inviting them to the Elysee Palace. The same could not be said for Mr Johnson.

Perhaps that’s no surprise when your government is spending its waking hours trying to work out what constitutes a party and whether you were there or not.

It points to the culture change needed in Britain. For all the talk of building a new ‘global Britain’, it is time for Mr Johnson to actually go and sell it. There are opportunities in Brexit, on regulation and trade, but strangely the man who ‘got it done’ has so far failed to take them up.

But if you think he has been slacking on the job, then you haven’t been to Edinburgh. As has long been observed, Nicola Sturgeon has no real instinct for business. Her record in government shows she believes her job is not to support firms in the mucky business of making money but to cure business of its baser instincts so they pursue ‘progressive’ aims instead.

As an aside, given the case for independence relies almost entirely on developing stronger economic growth, I would rank her failure to prioritise growth as her greatest strategic error.

Far from the First Minister learning from her mistakes, if anything, it’s getting worse.

One leading Scottish entrepreneur told me yesterday: ‘Scotland is now basically a no-go area for investment. It’s not so much the referendum, because nobody thinks it’ll happen. It’s because of the anti-business agenda here.’

A much-trumpeted National Strategy for Economic Transformation unveiled by Finance Secretary Kate Forbes a few months ago was, frankly, embarrassing. Rumours circulate Edinburgh that the First Minister gutted the document of anything interesting.

Perhaps not unrelatedly, what allies she had in the business community are no longer quite so supportive. In 2020, Benny Higgins, the former CEO of Tesco Bank, stood alongside the First Minister to unveil a report on Scotland’s post-pandemic economy.

Last month, while insisting he remained a ‘big fan’ of Miss Sturgeon, he berated the ‘poor’ relationship between Holyrood and business.

There was, he added ‘an excess of focus on social justice and more recently on public health. These are important things, but I do believe a vibrant, resilient economy is what we should be aiming for and business has an essential part to play.’ He is, of course, right. The problem is that Miss Sturgeon’s agenda actively blocks this from taking root.

Take, for example, a project Mr Higgins was involved with at its birth, the Scottish National Investment Bank. This was intended to support firms which needed capital to develop their businesses.

Yet this week, a report by Professor Ross Brown for the think tank Reform Scotland concluded the bank was ‘unfocused and ill-conceived’. Its remit doesn’t just focus on growing the economy, but on supporting the SNP’s green agenda. This confused remit means it has become completely ineffectual.

Stability

At some point we will all pay for this lack of direction. Without economic growth, the money coming in to pay for public services in Scotland will fall relative to the rest of the UK. Perhaps this wouldn’t matter in a time of plenty. But hard times lie ahead. And the SNP keeps signing cheques. By 2026, its huge commitments on benefits will require ministers to find an extra £760million. Good luck with that one.

Speak to business leaders across the UK and they will tell you they are keen to help. As noted above, Britain and Scotland also have so much going for them: a university sector which punches above its weight, a skilled workforce, the stability of sterling, and much else besides. A return to pre-crash growth is eminently within our grasp.

But north and south of Hadrian’s Wall there is growing frustration with politicians whose attention span lasts only till next week, and with governments which love spending the proceeds of growth without a clue as to how to get it in the first place.

Short-term, Britain needs a plan to stave off recession. Longer-term, it’s time to change our culture of decline, and to exploit the advantages we have. Who knows, it might just convince many independence supporters that the Union is worth sticking with.

It’s not that stupid, really. It just needs to happen.