The sad truth about today’s army is that the old-fashioned regimental system is on its way out, writes Tom Peterkin

In 2006 Brigadier Frank Coutts of the Kings Own Scottish Borderers wrote of the then Labour Government: “Put at its simplest, they had absolutely no right to disband Regiments whose spirit has helped Great Britain to win every conflict in which it has been involved for over 300 years.”

Sadly, Brigadier Coutts is no longer with us. neither are the Kings Own Scottish Borderers, whose merger with the Royal Scots was part of Labour’s reorganisation of the Scottish infantry.

Two years after that unpopular amalgamation, the old soldier and Scottish rugby internationalist passed away. Throughout his long life, “The Brig” was a passionate opponent of regimental amalgamation. His traditional views were expressed in his 2006 book The Golden Thread from which the above quotation was taken. Today’s battle for the Scottish regiments has its origins in the 2006 defence strategy pursued by Labour’s then Defence Secretary Geoff Hoon with advice from the Council of Scottish Colonels under the chairmanship of Lt General Sir Alastair Irwin of the Black Watch.

Amongst today’s soldiers, however, one detects a different sort of anger over the political bun fight that has broken out over the army’s future. Yesterday figures indicating that The Highlanders and the Argyll and Sutherland Highlanders have the worst recruiting record in were cited as evidence to suggest that these two proud units are to be axed.

The prospect of yet more cuts being inflicted on Scotland’s proud military heritage has attracted bristling indignation from Labour and much bluster from the SnP.

These responses have been met with cynicism by military people of my acquaintance. “naked hypocrisy” was the phrase used by one person to describe Labour’s efforts to save the regiments that it effectively destroyed in 2006 by downgrading them to battalions and amalgamating them into the Royal Regiment of Scotland. While the irony of the SnP pontificating about the future of cap badges at a time when Alex Salmond’s own defence plans have been ridiculed was not lost on him either.

While there is anger about the cuts, the very sad truth is that the old-fashioned regimental system is on its way out. That has been accepted by today’s soldiers. The battalions of the Royal Regiment of Scotland, which trace their origins from the old Scottish regiments, no longer recruit in their traditional recruiting grounds. One thing has not changed. Soldiers are as professional as ever and want to make the best of what they have been left. To them the politics is a distraction and they would rather get on with serving with and recruiting for the new Royal Regiment of Scotland.

Or As one recently retired officer in the Highlanders put it to me: “This is a personal view, but there is still the chance to make the Royal Regiment of Scotland something that resonates and the insistence on the old names actually works against making the Royal Regiment of Scotland a military institution to be proud of.”

IALMOST choked on my porridge yesterday when I read that a Greek exit from the eurozone ‘would cost 50,000 Scottish jobs’. Allegedly. According to a report from the Fraser of Allander think tank Strathclyde University, if Greece quits the eurozone – otherwise known as doing a “Grexit” – Scottish exports would slump and banks would stop lending. If the whole eurozone fell apart, the results would be even more disastrous. As many as 144,000 Scots jobs could be lost and “the event would be comparable in scale to the effects of the recent great recession.”

now the eurozone is not going to collapse, even though speculation about it makes for great headlines. Germany, Europe’s top economy and the world’s third biggest exporter, needs the euro too much. Some 60 per cent of German exports go to other EU members. If Germany returned to the Deutschemark, its currency would soar in value, killing exports and plunging the German economy into recession.

To save the euro, at some stage Germany is going to do a U-turn and agree to systemic reforms of the eurozone. These will include letting the European Central Bank become a lender of last resort (instead of doing it by the backdoor), and introducing collective sovereign bond issues guaranteed by all member states. There will also be an easing of austerity and a turn to growth.

How do I know? Because federal elections in Germany are only a year away, and all the polls suggest Angel Merkel will fail to get a majority. The FDP, her current coalition partner, is in electoral meltdown while the opposition Social Democrats and Greens are on track to emulate the success of the French socialists. Either Merkel drops her opposition to eurobonds and growth policies or the Social Democrats will do it in her place. Of course, there is still a high chance Greece could exit the euro, despite having acquired a (nearly) stable government. However, the Greek electorate has probably done enough to keep the EU financial bailout in place. And to win changes – don’t call it a renegotiation! – to the agreement that governs how fast Greece must cut its gargantuan budget deficit. Expect Greece to be given more time to put its economic house in order. As one anonymous “high EU official” was quoted this week (probably Jose Baroso, the Commission President), it would be “delusional” for the eurozone not to be more flexible with Athens.

So there is little prospect of 50,000, far less 144,000, Scots workers heading for the dole queue because the Greeks have abandoned the euro. In fact, this week brought good news on the Scottish jobs front, with data showing an extra 18,000 jobs (net) had been added in the three months to April – the hardest part of the winter. Some 71.1 per cent of the adult Scots population is in a job, compared to 70.6 per cent in the UK as a whole. But good news doesn’t seem to attract the headlines, for some reason.

Even if Greece did exit the euro, I am resolutely sceptical that the impact on Scotland would be anywhere as dire as the Fraser of Allander report predicts. Their calculation was made using an economic model originally created by staff at InG, a giant Dutch banking and insurance group that had to be rescued in 2008 by the netherlands Government. Therein lies a tale.

Since its brush with insolvency, InG has over-compensated when it comes to predicting the future, preferring to err on the side of doom lest anyone remember its over-optimistic, profligate past. InG also has a big presence in Greece and is benefiting handsomely because Greek depositors are switching accounts from local banks to institutions like the Dutch company. Which makes me rather suspicious of InG’s motives.

InG’s top soothsayer of the Apocalypse is Carsten Brzeski, the chief economist of its commercial banking arm,. The colourless Mr Brzeski is never off television forecasting absolute disaster. Last Sunday, as the Greeks were voting, he tweeted fans amongst the hedge fund managers and bond brokers: “Germany kicks Greece out of the euro. It could happen next Friday.” And pigs might fly. For the record, Mr Brzeski was formerly vice president and senior economist at ABn Ambro, the Dutch bank whose purchase nearly destroyed RBS. For some reason, Brzeski‘s forecasting prowess failed to notice the massive losses ABn was clocking up.

The InG economic model focuses on trade linkages – or the lack of them in the event of a complete euro meltdown. Fraser of Allander thinks Scotland would suffer particularly from a loss of sales to America, as Europe’s problems reduced business confidence inside the US. Scotland exports a lot to America.

However, the Fraser of Allander version of the InG model deliberately leaves out any compensating actions by governments in America and the EU. True, you can’t predict with certainty what such interventions might be. But you could model a range of possibilities, which Fraser of Allander did not do. That would have reduced those scary Scottish unemployment numbers to something sensible. But that would mean fewer headlines for Fraser of Allander in its (friendly) rivalry for media attention with Glasgow University’s Centre for Public Policy for Regions.

Intervention there is going to be, even if Greece stays in the euro. This is because the global economy is slowing and Spain remains an urgent candidate for a bailout. The Bank of England is on the verge of announcing a new round of quantitative easing to flood the British economy with liquidity. On Wednesday, the US central bank announced it was extending its own monetary easing programme by a further six months. A cut in interest rates by the European Central Bank is also on the cards.

It is easy to talk ourselves into a new global recession. Instead, we need a dose of common sense. Economies are the product of human decisions, and those decisions can always be changed for the better.