Seeing through Sturgeon’s economic spin

I voted Remain in the EU Referendum.  And I’d vote Remain again tomorrow.  I think the Leave vote will result in lower growth, at least in the short term, to go alongside my many non-economic reasons for voting to stay in the EU.

For a short time this meant I was standing “shoulder-to-shoulder” with Nicola Sturgeon and the SNP in supporting a common goal, even if our reasons for desiring that goal were not always the same… perhaps there’s a lesson in there somewhere.  I even shared the First Minister’s hesitance about the UK Government’s use of so-called ‘scaremongering’ tactics and warnings of financial Armageddon.

Yet on Tuesday, Ms Sturgeon stood behind a lectern at Bute House and gave a speech which outlined the “potentially huge cost” to Scotland of the Brexit vote – it  has left us facing a “profound and long-lasting impact on the public finances and the wider economic and societal wellbeing of both Scotland and the UK as a whole”.  Stark words.  Some may even call it… scaremongering.

These warnings accompany this Scottish Government ‘analysis’ which argues that, by 2030, the Brexit vote may cause Scotland’s GDP to fall by £11.2bn compared to the position where the UK had remained an EU member.  Understanding that the 2015/16 GERS figures were released the following day, it is clear that this was nothing more than an attempt to head off what is certain to be bad news for Scottish nationalists, although good news for Scotland.

I’d suggest reading the ‘analysis’ yourself.  It isn’t a long document (9 pages) and simply draws down on pre-Brexit analysis conducted at a UK-wide level and assigns Scotland a per capita share of the predicted impact.  There is no new analysis whatsoever.

Analytical flaws

Indeed, to my mind, there are some serious flaws in the ‘analysis’ which fail to stand up to even the most basic scrutiny:

  • • why is Scotland assigned a straight per-capita share of the overall impact on the UK, rather than any analysis attempted on the impact to various revenue streams?  For example, it has been suggested that the financial services industry in London will bear the brunt of Brexit’s impact which will clearly see greater impact on England than Scotland.
  • • why is there no assessment taken of potentially positive impacts from Brexit?  For example,  the Scottish Fishermen’s Federation has refuted SNP scaremongering on Brexit’s impact on the industry

Some of the “spin” is also truly shocking, a key example being Table 4:

Screen Shot 2016-08-24 at 18.39.57

This takes the UK-wide impact on all government revenues, assigns Scotland a per capita share and then expresses that share as a percentage of the Scottish Government’s fiscal DEL.  Not all Scottish public spending but only a very narrow definition of spending by the Scottish Government.  Why?  Other than a politically-motivated attempt to amplify the impact for your own ends?

To use the top line as an example, this takes an implied £1.7bn fall in all tax revenue and compares it to just part of the block grant supplied to the Scottish Government (£28bn) rather than the entirety of public spend in Scotland (£68.6bn), conveniently ignoring reserved spending like pensions and benefits.  So rather than the 6% “equivalent reduction”, we’d be talking about <2.5% – and that’s only if the modelling is correct AND the loss of revenue was withdrawn, pro rata, from public spending.

Frankly, it’s a disgraceful piece of spin which should shame those standing behind it.

Of course, what is most remarkable here is that this report leans heavily on the pre-Brexit analysis conducted by the Treasury, of which Nicola Sturgeon said:

People have got the savvy to see through of some of the overblown claims… We only have to look at the Scottish independence referendum to know that kind of fear-based campaigning starts to insult people’s intelligence and can start to have a negative effect

And here

I think the Treasury, like they did in the Scottish independence referendum, are likely to be over-stating their case

Two months later and it appears Ms Sturgeon is only too happy to insult the Scottish people’s intelligence by using the same “overblown claims” to support her own political ends.

Not content with blatant hypocrisy in the use of data she herself has rubbished, the Scottish Government’s ‘analysis’ also uses blatantly hypocritical logic:

Screen Shot 2016-08-24 at 18.53.46


Replace “EU” for “UK” in this quote and consider how a new, unproven currency would stand up in comparison to the effect described on Sterling.  Remember that Scotland exports £11.6bn to the EU and £48.5bn to the rest of the UK.  How can you make the argument that this logic applies to one market and not the other, four times more important, market – particularly if your premise for overturning the 2014 referendum result is that the UK is no longer in the EU?

And then…

Screen Shot 2016-08-24 at 18.50.48

Now apply this to Scotland, currently a net beneficiary from the UK to the tune of £9bn, and the negative impact from the “channels outlined above”.

The entire ‘analysis’ is a dire, desperate attempt to provide a Very Big Number with which to counter the Very Big Number that is published in today’s GERS figures.  Sadly for Ms Sturgeon though, in her own words, “people have got the savvy to see through some of the overblown claims”.

An updated version of a blog on the author’s own site

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