Scotland must invest in its future now

THE numbers detailed in Spending Review unveiled by Rishi Sunak on Wednesday would normally send shivers down the spine. The United Kingdom has had the largest fall in output for more than 300 years. Its economy is expected to shrink by at least 11 per cent next year. In five years’ time borrowing may be almost the same as total GDP. Public sector workers will have their pay frozen. Unemployment may reach 7.5 per cent by spring of next year. And the solution – from a Conservative Chancellor of the Exchequer – is borrowing and spending.

Except that, as everyone is aware, these are no normal times. Whatever might have been the achievements or deficiencies of the current Westminster government were swept aside within weeks of its arrival in office by the coronavirus emergency. A germ has upended the global economy more comprehensively than the bankers and speculators behind the financial crash of 2008.

Against that background, Mr Sunak’s figures – so cataclysmic that those swept down by them would usually see no prospect of recovery – stand out more clearly. They show that in one respect, but a crucial one, we are relatively fortunate.

Mr Sunak said, correctly, that we are spending and borrowing far more than we can afford, and that it is “clearly unsustainable over the medium term”. But governments need not, and should not, think in those terms. They ought to be taking steps to improve matters decades from now. With the cost of borrowing at an historic low, the opportunity to do so coincides with the necessity to do so forced upon us by the pandemic.

What will determine whether that future is brighter or bleaker is growth. For more than a decade the UK, in common with most other developed nations, has had a poor record here: the Chancellor’s projection of growth next year of 5.5 per cent, and 6.6 per cent the year after would entail more than doubling, and then tripling, the average in recent years.

There is no question that it is achievable, however, if the correct approaches are followed. But that will not be done with borrowed public money alone; the most that it can do is to create the circumstances in which innovation, productivity and growth can thrive.

The vital ingredient is to let business thrive, to free trade from regulation and restraint, and to encourage a climate in which elected officials listen to and work with the people who create the opportunities that provide jobs, better services, cheaper products, greater freedom of choice, improved health, greater security – all the things, in fact, that most of humanity lacked for most of history.

Scotland was the birthplace not only of the ideas that lie behind that improvement but of many of the inventors and entrepreneurs who, by putting them into action, created the industries, products and growth in trade and output that transformed the world.

The average UK citizen is 30 times more prosperous now than at the time of Adam Smith’s death, when the world’s population was an eighth of what it is now, and not a single country offered an average life expectancy beyond the age of 40. Enterprise has provided standards of living for even those on modest incomes that are more comfortable than the richest enjoyed in previous eras.

The Scottish government should aim to lead a revival of that. It should reflect on that record as it decides where its resources, including the extra £8 billion it has received this year from the Exchequer would be best employed.

If we shoulder vast debts out of necessity, they must not be squandered on short-term fixes, vanity projects or misguided infrastructure. We should be thinking of where we could be in 50 years time, and listening to what the entrepreneurs who will create the jobs and industries of the next century say they need.