Scotland doesn’t benefit from British economic 'strength'

But the SNP’s lack of radicalism makes it difficult for the Yes campaign to capitalise.

Against expectations, the Chancellor’s visit to Glasgow last week was a success. Speaking to a gathering of Scottish business leaders, and armed with a hefty new Treasury report, George Osborne set-out a detailed critique of SNP plans for Scotland to retain the pound after independence, a key feature of the nationalists’ 2014 prospectus. But framing his specific warnings about the pitfalls of a "Eurozone-style" monetary union was a broader attack on the economics of separation: the size and scale of the UK’s economy shields Scots from the "rapids of globalisation" – leave it and Scotland could be exposed to ameltdown of Irish, Greek or Cypriot proportions. This is a powerful line, repeated with brutal efficiency by unionist campaigners. The problem, however, is that it simply doesn’t stack up. In fact, Scotland’s vulnerability to global economic shocks is amplified by its continued membership of the UK.

Two recent reports – The Mismanagement of Britain by the Jimmy Reid Foundation and The British Growth Crisis by the Sheffield Political Economy Research Institute (SPERI) - shatter the notion of British economic strength. The former, written by Scottish economist Jim Cuthbert, out-lines the long-term decline in the competitiveness of the UK economy. Cuthbert argues that the growing deficit in the UK’s trade in general goods and services from the 1970s onwards was disguised first, in the ‘80s, by high North Sea oil tax receipts and then, during the ‘90s, by revenues from an increasingly dominant financial services sector. The underlying deficit became more pronounced as successive Westminster governments, Conservative and Labour, allowed Britain’s manufacturing base to erode. Ultimately, this made the British economy over-reliant on a handful of large financial institutions operating at the heart of the international financial system.

In The British Growth Crisis, Professor Colin Hay explains how Britain, as one of a group of deregulated economies including the United States and Ireland, felt the effects of the 2008 crash earlier and more powerfully than other Western states with smaller and less globally integrated banking sectors. As the crisis developed, spreading out from its Anglo-American epicentre, international trade went into free-fall. This tightened the squeeze on British manufacturing, which by now was in no condition to prop-up the UK’s public finances as they grappled with recession. The subsequent loss of taxable economic activity, as well as the huge cost of the bank bail-outs, sent the economy into a prolonged slump and precipitated an explosion of British debt.

Coupled with Osborne’s austerity strategy, the structural imbalances in the British economic model described by Cuthbert and Hay account for the severity of Britain’s downturn (the worst since the 1930s) and the weakness of its recovery (the slowest on record). While growth is beginning to return to France, Germany and even the US, the UK remains more or less stagnant. None of this happened by accident. It was the result of decisions taken by two or three generations of British political leaders which viewed state intervention in the market as a barrier to prosperity. The consequences for Scotland, which has one of the worst social records in the developed world, have been profound. Scots might be entitled to feel doubly aggrieved given the origins of the current crisis lie, to some extent at least, in the liberalising policies of the Thatcher governments they repeatedly rejected. That Scotland’s oil wealth was used to fund the implementation of a number of those policies only adds insult to Scottish injury.

Yet, despite the efforts of the pro-independence left, the threat to Scotland’s economic security posed by British financial instability does not feature as heavily in the constitutional debate as it might. This is because the SNP, for both political and ideological reasons, accepts much of the neo-liberal settlement which has dominated British public life for more than three decades. The clearest illustration of this can be found in the party’s support for the current UK-wide system of financial regulation (described by SNP finance secretary John Swinney as a "solid framework") to remain untouched following the break-up of the Union – a position which reflects the closeness of Alex Salmond to Scottish finance capitalism over recent years. The SNP’s controversial commitment to cut corporation tax provides further evidence of its free-market tendencies.

The political significance of the nationalists’ economic conservatism was laid bare last week, widely (and correctly) perceived as a particularly bad one for the Yes campaign. The economic case for independence should be among the SNP’s strongest cards: the British laissez-faire experiment has proved a spectacular failure, leaving ordinary Scots facinga futureof falling living standards and deteriorating working conditions. Moreover, what remains of the Scottish welfare state - protected from the most radical of New Labour’s reforms by devolution – has come under sustained assault by an unpopular Tory-led government determined to turn a crisis of neo-liberalism into one of social democracy. But, in its current state, the SNP can’t make any of this work to its advantage.It may require some awkward policy U-turns and a degree of ideological repositioning, but Salmond has to start explaining just how serious a hazard the UK represents to Scotland’s economic health.

Scotland's First Minister Alex Salmond gestures during a press conference in St Andrews House in Edinburgh. Photograph: Getty Images.

James Maxwell is a Scottish political journalist. He is based between Scotland and London.

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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser