Cable and Balls get cosy

Both appear on Andrew Marr show this morning

As journalist Paul Waugh tweeted shortly after the event: "Sight of Cable and Balls getting cosy on Marr sofa will infuriate several Tory MPs". The meeting of the two politicians was timely after the Shadow Chancellor's overtures to the Lib Dems, and Vince Cable in particular. In a column in the Sunday Mirror today, Ed Balls has written:

The country cannot afford to wait until the next election before we get a change of course. Because the longer ministers refuse to act, the more long-term damage will be done to our economy. That's why I want to work with other parties - including sensible people in the Government - on a new economic plan.

In his heart of hearts, Lib Dem Business Secretary Vince Cable must know that Plan A is not working. After all, before the last election, he warned - with Labour - that David Cameron and George Osborne's policies would backfire. And sadly our warnings came true.

As well as confirming that a third runway with Heathrow "isn't going to happen", Cable, in his interview with Marr, chimed with Balls's rhetoric, saying that he was a man of "the centre left" who believes in "fairness and redistribution". Balls's response? "Sounds good to me".  

Business secretary Vince Cable. Photograph: Getty Images
Photo: Getty
Show Hide image

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.