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The truths they don't want you to read....

Monday, March 16, 2009

The Scottish Economy

If any politican has come out of the Finanical Crisis with their reputation enhanced, then it is Vince Cable of the LibDems.

He has certainly got it less wrong than the rest put together, and whilst he has the ability to make incisive comment without the danger of ever having to put these views into practice, his opinion is to my mind the most accurate on how to redeem the situation.

He also makes some uncomfortable points.
The collapse of the Royal Bank of Scotland would have wiped out the budget of an independent Scotland, the deputy Liberal Democrat leader said.

Vince Cable said the RBS balance sheet was 15 times the size of Scotland's gross national product.

Yes; he is right.

Just like Iceland, we found ourselves with a economy that was founded on one sector and one sector alone, and when the crunch came it was hugely magnified because of that over-dependence. If we had been an Independent country when this happened, then we would have been cap in hand to the IMF, implementing huge spending cuts and seeing the currency collapse.

Had we been members of the Euro, then the impact would have been much larger, as the most basic economic tools would not have been available to any Finance Minister.

The lesson is clear, the economy needs to have a wide spread of trades, professions and manufacturing if it is to be robust and able to withstand economic shocks.

1 comment:

Anonymous said...

Quite. Scotland is/was supposed to have developed a knowledge-based economy, but when compared to countries of a similar size it hasn't really happened to a great extent.

There's no one reason why, nation wide. In the Outer Hebrides it is obvious - the pathetic broadband service that has driven many people and businesses to, and back to, the mainland.

Less obvious across the rest of Scotland, where IT and knowledge based companies have only a limited foothold, even in Dundee, a city with a strong knowledge economy background.