06 March 2006

Political games

The Scotsman reports the dissatisfaction of the Institute of Directors with the performance of the Scottish economy:
"JACK McConnell's flagship policy of growing the Scottish economy has failed, according to a damning verdict from one of the country's leading business experts.
David Watt, director of the Institute of Directors in Scotland, told The Scotsman that the First Minister had not delivered the growth in the economy he promised at the last election.
In a detailed series of verdicts on the Scottish Executive and the parliament, Mr Watt warned that the majority of ministers did not do anything to help develop Scotland's economy, and that few MSPs had any idea of the crippling impact the regulations they passed had on Scottish business.
...
"If you look at our business start-up rate and our economic performance, it doesn't seem to be improving comparatively. The performance has not been what we all hoped for, if you look at the figures." Asked whether, if there was an election today, Mr McConnell would have failed in his top priority of growing the Scottish economy, Mr Watt replied: "Yes, he would fail".

But the levers available to the Executive to influence economic growth (and issues such as business start-up rates) are limited. Marginal changes in business rates and the availability of grants towards certain forms of business investment in certain areas are unlikely to have a radical impact on the overall economic health of the country. And improvements in transport infrastructure may well have a beneficial effect but only over the longer term. Furthermore, while the size of the public sector may be less than helpful to economic growth, even a major reduction in that size would take a long time to make an economic impact. No, Scottish economic performance is in the short term dependent upon macro-economic factors outwith Executive control.

The real criticism of the McConnell regime is its arrogance in thinking that, because it announces that economic growth is its first priority, it can actually make a significant difference. If it had been honest, it would have admitted that Scottish economic performance was something that it could only influence at the margins but that even that was worthwhile doing, although tangible impacts would be hard to identify. But since when did politicians like to admit that they were of little influence?

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