Tuesday, 24 March 2015

It's The Economy, Stupid...

Something that surprisingly bears repeating is the adage that the key battleground for elections in this country is the economy.  Every election going way back has been won on the election.  The same can be said of last years referendum too, where the failure of Yes Scotland to convince enough people to vote “yes” can be attributed to Sterlingzone and a failure to win the big economic arguments.

Those arguments re-surfaced again last week when the latest GERS figures were released, showing that expenditure was outstripping revenue by £2,328 per head.  On first reading it does look like a blow to supporters of Fiscal Autonomy. Even more so when the SNP deployed the ‘we would do things differently’ argument… without really explaining what they would do.  Given that 2016 will be the first Holyrood elections that will feature a fiscal debate thanks to the Calman recommendations coming into law gives the SNP an incentive to look at the finance side of things without adopting the “two in the bush”-isms of their love of Laffer style corporation tax cuts.

Do the GERS figures blow a hole in the case for Fiscal Autonomy, as has been argued here?  Well… no, not really.  For one thing, Fiscal Autonomy is the logical conclusion of devolution (Scottish solutions for Scottish problems and all that) and for another, well the GERS figures do not take into account the so called “tax gap” – the gap between the tax that should be paid and the amount collected by HMRC.  You would hope that Revenue Scotland would be better at gathering money than it’s UK level counterpart.

We would like to think that the SNP would be better at making the case for Fiscal Autonomy than they were with the economic case for Independence.  For all that the BBC have found themselves cast as the bogeymen de jour of pro-Independence supporters, the real reason for the no vote can be found in the SNP’s failure to win the economic argument. Oh and Sterlingzone.

What did occur in the referendum though was that there were people who were immune to the bad policy of Sterlingzone.  I hypothesized that currency would not be as much of a potent argument for people with very little currency.  Those people immune to the failures of Sterlingzone would also be very immune to Osborne’s supposed economic miracle as the Tories still remain level pegging with Labour in the polls in spite of being a country mile ahead of Labour when it comes to polling on each parties economic competence.

Osborne has staked his parties’ fortunes on the economy, which is why there was the emphasis on the job being half done, on the work still to be done and on the dangers of leaving it to Labour.  Yet the figures in Osborne’s budget do not add up.  His claim that wages are coming back to pre-recession levels is something that is not being felt.  He has missed his deficit target, borrowing is still rising and the country still feels in recession.  That Osborne is still ahead in economic competence says more about the ineptitude and, frankly cowardice, of the two Eds.

Competence because Milliband (and Balls) have allowed Osborne’s arguments about the recession being the fault of Labour’s overspending (rather than their adherence to Laissez Faire economics, or as Brown rebranded it “Light Touch Regulation”) to become conventional wisdom.  Cowardice, because of Balls reluctance to formulate an alternative to George’s Scorched Earth.  It is this which has provided the room for the Greens and more pertinently the SNP to come and hoover up votes from people who do not agree that Austerity is working.

It is obvious that this election will feel like no other election.  That the conventional arguments about the economy have been replaced by a weariness of austerity is still to be added to the calculations of the main parties.  It could even be argued that the main parties still haven’t quite understood that stagnating wages have exacerbated the economic troubles rather than helped.  In the meantime the SNP & Greens seem to be making hay at the expense of those who claim there is no alternative to austerity.

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