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Scotland ‘paying economic price’ for staying with declining UK

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SCOTLAND is “paying the economic price” for staying in the Union according to a new analysis, which says the UK is in long-term decline and lagging behind many other countries.

Research from independence project The Bottom Line says small advanced economies – such as Austria, Denmark, Ireland, Netherlands, Norway and Switzerland – have seen cumulative growth that was on average double that of the UK between 1999 and 2019.

In 1999, only four of 12 small advanced economies – Denmark, Norway, Sweden and Switzerland – had a measure of the economic output of a nation per person, known as GDP per capita, that was higher than the UK.

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The National:

But by 2019, 11 of the 12 did, with the gap between the small economy average and the UK more than £12,700 per person, it states.

The Bottom Line initiative involves David Simpson, founding director of the Fraser of Allander Institute at Strathclyde University, Graeme Blackett, who was economic adviser to the SNP Growth Commission and former SNP MP and Treasury spokesperson Roger Mullin.

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It was recently launched with the aim of adding to the debate around the economics of an independent Scotland.

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The new paper, the second published by the group, uses the International Monetary Fund’s (IMF) World Economic Outlook Database to conduct a long-term analysis, while noting GDP is an “imperfect measure” and does not include “everything that is important in life”.

It found that between 1980 and 2019 – before the Covid pandemic – the UK economy’s cumulative GDP growth was also lower than average for large advanced economies, a group of the 38 wealthiest economies known as the OECD, as well as the G7 and the G20 group of countries.

The National:

One exception is the EU, which the research says has had lower growth rate than the UK “primarily as a result of the absorption of new members in central and eastern Europe”.

“Over a 40-year period, UK GDP increased by around four and a half times (in nominal terms, that is, before taking account of inflation),” the paper states.

“In the same period the average large advanced economy and the average small advanced economy grew six-fold.

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“Within the small advanced economy group, Singapore, Ireland and Israel grew most rapidly, as they transitioned to advanced economies.

“Almost all of the small advanced economies outperformed the UK in cumulative GDP growth between 1980 and 2019.”

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The analysis says the UK’s GDP per capita has been increasing in the last four decades – but that the rate of increase has been slower than other advanced economies.

It found between 1999 and 2019, UK nominal GDP per capita increased by 48%, compared with the 81% average for large advanced economies and 112% average for small advanced economies.

“When economic statistics are reported on the news they tend to be short term indicators, for example, the change in GDP or GDP per capita compared to the previous year,” the paper said.

“On these measures, it can appear that the gap between the performance of the UK economy and other advanced economies is small – and in a some years the UK may grow more than the average.

“However, even a modest underperformance results in a significant gap when it persists over decades.

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“The gap between the UK’s GDP per capita growth and other advanced economies has widened in the last two decades and particularly in the decade since the financial crisis.”

The paper concludes: “The UK is in long term relative economic decline, falling further and further behind countries of a similar size and stage of development as Scotland.

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“The choice that Scotland faces is to remain part of the declining UK economy, or to realise agency and take responsibility for improving the performance of the Scottish economy.”

A UK Government spokesperson said: “The UK is a family, and one of the benefits of that is how we share our resources – our economy is stronger because we are a United Kingdom and we had the fastest growth in the G7 last year.

“The Scottish Government’s official figures show that being part of the UK is worth more than £2,200 every year for each person in Scotland.”

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