Are we on the verge of a blue-yellow coalition?

Senior Lib Dems are optimistic about doing a deal with Cameron.

Memo to fellow progressives: this might not be our "moment". Sorry to be the bearer of bad news on the day that hundreds of people are gathering in central London to call for electoral reform, but I'm here to inform you that the Lib Dems might be about to do the unthinkable and join up with the Tories.

One senior Lib Dem frontbencher told me this morning that the Tories will "offer us a referendum on electoral reform. I have no doubt about it. They are desperate." He added: "My ideal outcome is unachievable. Personally, I would like to have done a deal with Labour."

So, are we on the verge of a blue-yellow coalition government, with Lib Dem ministers taking seats in a Cameron-led cabinet? Perhaps -- but almost everything about this election and the campaign that preceded it has been unpredictable. There's no reason why these post-election negotiations won't turn out to be just as volatile or as erratic.

Personally, I hope and pray that Nick Clegg does not fall for the Tory proposals that are put in front of him in the coming days. He has to remember that Cameron and co can't be trusted on electoral reform; the Conservatives are -- and always will be -- the party of the status quo.

But I've prepared myself to be disappointed. A Cameron-Clegg administration is no longer inconceivable. The Lib Dem leader's ludicrous decision to refer to the party with the most seats and votes as having a "mandate" boxed him in and forced him to negotiate with the Tories first. I asked my Lib Dem source why he had done so. His reply: "There is no point in saying we're going to play by rules that don't exist. We've got to play by the rules as they are."

Clegg and co may regret that decision at the next election.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.